Under absorption costing, which of the following costs would not be included in finished goods inventory?
A) hourly wages of assembly worker
B) straight-line depreciation on factory equipment
C) overtime wages paid to factory workers
D) advertising costs for a furniture manufacturer

Question

Quizplus · Accepted Answer

Under absorption costing, only manufacturing costs are included in finished goods inventory. Advertising costs are considered non-manufacturing costs and are expensed in the period they are incurred. Therefore, option D is the correct answer as it is a non-manufacturing cost. The other options are all manufacturing costs and should be included in finished goods inventory.

Under Absorption Costing, Which of the Following Costs Would Not