Determine which costing method (variable costing or absorption costing) accounts for fixed manufacturing costs as costs of the period: a. at the time of incurrence, or b. at the time the finished units to which the fixed overhead relates are sold. A. Absorption costing uses (a) and variable costing uses (b). B. Variable costing uses (a) and absorption costing uses (b). C. Variable costing uses (a) and absorption costing uses neither. D. Absorption costing uses (a) and variable costing uses neither.

Question

Business

Jaelynn Shepard

28 July, 10:51

Determine which costing method (variable costing or absorption costing) accounts for fixed manufacturing costs as costs of the period: a. at the time of incurrence, or b. at the time the finished units to which the fixed overhead relates are sold. A. Absorption costing uses (a) and variable costing uses (b). B. Variable costing uses (a) and absorption costing uses (b). C. Variable costing uses (a) and absorption costing uses neither. D. Absorption costing uses (a) and variable costing uses neither.

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Answers (1)

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Renee Day · Answer 1

The correct answer is B.

Explanation:

Giving the following information:

Determine which costing method (variable costing or absorption costing) accounts for fixed manufacturing costs as costs of the period:

a. at the time of incurrence,

b. at the time the finished units to which the fixed overhead relates are sold.

Absorption costing allocated fixed manufacturing costs to the product. Therefore, the fixed costs go to the cost of goods sold.