Asked by Karlie Kuang on May 10, 2024
Verified
Which of the following would be included in the cost of a product manufactured according to absorption costing?
A) advertising expense
B) sales salaries
C) depreciation expense on factory building
D) office supplies costs
Absorption Costing
An accounting method that includes all of the direct and indirect manufacturing costs in the cost of a product.
Depreciation Expense
The systematic allocation of the cost of a tangible asset over its useful life.
Factory Building
A physical structure designated for manufacturing processes and activities.
- Identify which costs are included and excluded under both costing methods.
Verified Answer
WT
Warren TubalMay 15, 2024
Final Answer :
C
Explanation :
Absorption costing includes all manufacturing costs, both variable and fixed, in the cost of a product. Depreciation expense on a factory building is a fixed manufacturing cost, thus it is included in the cost of a product under absorption costing.
Learning Objectives
- Identify which costs are included and excluded under both costing methods.
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