Question

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.

Answer 1

The correct answer is B.

Step-by-step 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.