To calculate the product cost using absorption costing, you would include: Group of answer choices a. direct materials, b. direct labor and other variable manufacturing costs variable manufacturing costs only direct materials, c. direct labor, d. variable overhead and fixed manufacturing overhead variable manufacturing and variable selling expenses

Question

Kaylen Black

Business

20 August, 08:58

To calculate the product cost using absorption costing, you would include: Group of answer choices a. direct materials, b. direct labor and other variable manufacturing costs variable manufacturing costs only direct materials, c. direct labor, d. variable overhead and fixed manufacturing overhead variable manufacturing and variable selling expenses

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Answers (1)

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Kolten Buck · Answer 1

Answer: Option D

Explanation:

Absorption cost = Fixed cost + Variable cost

Fixed cost = Direct materials + Direct labor

Variable cost = Manufacturing expenses + Selling expenses

The fixed cost includes the direct labor and direct materials which is also known as the direct cost. The variable overheads includes the variable manufacturing expenses and variable selling expenses.

The term absorption costing explains that the units produced absorb all the cost involved in the production and selling. This method can also be termed as full costing.