If a firm uses absorption costing,fixed manufacturing overhead will be included
A)only on the balance sheet.
B)only on the income statement.
C)on both the balance sheet and income statement.
D)on neither the balance sheet nor income statement.

Question

Quizplus · Accepted Answer

If a firm, using absorption costing method, then the fixed manufacturing overhead will be included in both the balance sheet and income statement. The fixed manufacturing overhead is allocated to the cost of goods produced and included in inventory on the balance sheet. When the goods are sold, the overhead cost is expensed and included in the cost of goods sold on the income statement. Therefore, the answer is option C.

If a Firm Uses Absorption Costing,fixed Manufacturing Overhead Will Be