Question

Which of the following types of costs is a product cost for absorption costing but a period cost for variable costing? a.direct labor b.total administrative expense c.fixed factory overhead per unit sold d.variable selling expense e.direct materials

Answer 1

Answer:

C. Fixed Factory Overhead Per Unit

Explanation:

Variable costing and marginal costing income statements mainly differ because of treatment of fixed factory overhead.

Inventory costs under variable costing include only direct material, director labor and variable factory overhead.

Whereas in absorption costing, fixed factory overhead also become part of product cost in addition to direct material, direct labor and variable factory overhead.