Question

Under variable costing income statements, product cost would include Direct materials only Direct materials, direct labor and fixed manufacturing overhead Direct materials and direct labor Direct materials, direct labor, fixed manufacturing overhead and fixed selling and administrative expenses

Answer 1

Answer:

Direct materials and direct labor.

Explanation:

A variable cost is the one that vary depending on the level of production or sales. The cost increase or decrease according to the level of volume change.

The variable costing charges only direct costs (material, labour and variable overhead costs) into the cost of a product. It is lower than the cost calculated under absorption costing, that also include fixed manufacturing overhead.

Fixed manufacturing overhead is considered as a periodic cost and charged from the periodic gross profits.