Asked by maddie arveseth on Jun 17, 2024
Verified
Under variable costing, which of the following costs would be included in finished goods inventory?
A) neither variable nor fixed factory overhead cost
B) both variable and fixed factory overhead cost
C) only variable factory overhead cost
D) only fixed factory overhead cost
Variable Costing
A costing method in which variable manufacturing costs are included in product costs, while fixed manufacturing costs are treated as period expenses.
Fixed Factory Overhead
Indirect manufacturing costs that remain constant regardless of the level of production, such as rent, insurance, and salaries of certain managers.
- Uncover the expenditures that are embraced and left out in the two costing practices.
Verified Answer
SM
Spiritual MotivationJun 20, 2024
Final Answer :
C
Explanation :
Under variable costing, only variable costs are included in the cost of inventory. This includes direct materials, direct labor, and variable manufacturing overhead. Fixed manufacturing overhead is treated as a period cost and expensed in the period incurred, not included in the cost of inventory.
Learning Objectives
- Uncover the expenditures that are embraced and left out in the two costing practices.
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