Under variable costing, which of the following costs would be included in finished goods inventory?
A) advertising costs
B) salary of vice-president of finance
C) wages of carpenters in a furniture factory
D) straight-line depreciation on factory equipment

Question

Quizplus · Accepted Answer

Under variable costing, only variable costs are included in finished goods inventory. Wages of carpenters in a furniture factory are a variable cost as they vary with the level of production. Advertising costs and salary of vice-president of finance are both fixed costs and are expensed in the period incurred. Straight-line depreciation on factory equipment is a fixed cost and is also expensed in the period incurred.

Under Variable Costing, Which of the Following Costs Would Be