Direct material and direct labour costs are assigned to inventory when using:
I. Absorption costing
II. Throughput costing
III. Variable costing
A)I and III only
B)I and II only
C)II and III only
D)I, II, and III

Question

Quizplus · Accepted Answer

Direct material and direct labour costs are assigned to inventory when using absorption costing and variable costing. Throughput costing only includes direct material costs in inventory, as it considers direct labour as a fixed cost that is expensed immediately. Therefore, the best choice is A, which includes absorption costing and variable costing but excludes throughput costing.

Direct Material and Direct Labour Costs Are Assigned to Inventory