Under absorption costing, which of the following costs would not be included in finished goods inventory?
A)direct labor cost
B)direct materials cost
C)variable and fixed factory overhead cost
D)variable and fixed selling and administrative expenses

Question

Quizplus · Accepted Answer

Under absorption costing, all manufacturing costs (direct labor, direct materials, and both variable and fixed factory overhead) are included in the cost of finished goods inventory. Variable and fixed selling and administrative expenses are considered period costs and are not included in the cost of inventory.

Under Absorption Costing, Which of the Following Costs Would Not