Which of the following statements is correct in relation to the costing of inventories?
A) Direct costing treats fixed production costs as an expense of the period and is not permitted as a method for valuing inventories under AASB 102.
B) Absorption costing treats fixed production costs as a product cost, allocating them to the goods produced, and is not permitted as a method for valuing inventories under AASB 102.
C) Absorption costing treats fixed production costs as an expense of the period and is the required method for valuing inventories under AASB 102.
D) Direct costing treats fixed production costs as a product cost, allocating them to the goods produced, and is not permitted as a method of valuing inventory under AASB 102.

Question

Quizplus · Accepted Answer

Direct costing treats fixed production costs as an expense of the period, which is not in accordance with AASB 102's requirement to include fixed production costs in the cost of inventories. AASB 102 requires the absorption costing method, which allocates fixed production costs to the cost of goods produced.

Which of the Following Statements Is Correct in Relation to the Costing