Use the information below to answer the following question(s).Honda Heaven produces and sells an auto part for $20.00 per unit.Direct materials are $8 per unit, while direct manufacturing labour averages $1.50 per unit.Variable manufacturing overhead is $0.50 per unit and fixed manufacturing overhead is $250,000 per year.Administrative expenses, all fixed, run $90,000 per year, with sales commissions of $2 per part.Production is 100,000 parts per year.And this year, 75,000 boxes were sold.
-Variable costing regards fixed manufacturing overhead as
A)an unexpired cost.
B)an inventoriable cost.
C)a period expense.
D)a product cost.
E)a deferred asset.

Question

Quizplus · Accepted Answer

In variable costing, fixed manufacturing overhead is considered a period expense because it is expensed in the period in which it is incurred, rather than being allocated to the product as a cost of production. Therefore, fixed manufacturing overhead is not included in the cost of goods sold and is not considered an inventoriable cost.

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