At the end of an accounting period, using absorption costing, the cost of goods sold account will include:
A)Direct material, direct labor, variable manufacturing overhead.
B)Direct material, direct labor, variable manufacturing overhead, and variable marketing and sales.
C)Direct material, direct labor, variable manufacturing overhead, and fixed manufacturing overhead.
D)Direct material, direct labor, variable manufacturing overhead, fixed manufacturing overhead, and variable marketing and sales.
E)Direct material, direct labor, variable manufacturing overhead, fixed manufacturing overhead, variable marketing and sales, and fixed marketing and sales.

Question

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs, both variable and fixed. Therefore, the cost of goods sold will include direct material, direct labor, variable manufacturing overhead, and fixed manufacturing overhead. Variable marketing and sales costs are not included in the cost of goods sold.

At the End of an Accounting Period, Using Absorption Costing