Under absorption costing,fixed overhead costs applied to products will be included in ________.
A) Cost of Goods Sold on the income statement when the products are sold
B) Ending Inventory on the balance sheet before the products are sold
C) Extraordinary Item on the income statement when the products are sold
D) A and B

Question

Quizplus · Accepted Answer

Under absorption costing, fixed overhead costs are included in both the cost of goods sold on the income statement when the products are sold, and in the ending inventory on the balance sheet before the products are sold. Therefore, the correct answer is choice D. The fixed overhead costs are not considered an extraordinary item on the income statement.

Under Absorption Costing,fixed Overhead Costs Applied to Products Will Be