Question

The reporting method that includes in the cost of inventory (and cost of goods sold) all product costs, including both fixed and variable costs is known as:

Answer 1

The answer is absorption costing.

Step-by-step explanation:

This method is used to indicate that all costs have been absorbed by the units produced, and includes the following costs (fixed and variable):

1. Direct labor.

2. Direct materials.

3. Fixed manufacturing overhead.

4. Variable manufacturing overhead.