Which of the following best describes costs assigned to the product under the variable costing method?
Direct labor (DL)
Direct materials (DM)
Variable selling and administrative
Variable manufacturing overhead
Fixed selling and administrative
Fixed manufacturing overhead
a. DL, DM, variable selling and administrative costs, and variable manufacturing overhead.
b. DL, DM, and variable manufacturing overhead.
c. DL, DM, variable manufacturing overhead, and fixed manufacturing overhead.
d. DL and DM.
e. DL, DM, fixed selling and administrative, and fixed manufacturing overhead.
What Are Variable Costs:
Companies usually incur a mix of fixed and Variable Costs in their production process. Variable Costs are those that will vary based on the amount of units produced. Examples include direct materials used and direct labor wages.
Answer and Explanation:
The answer is B.
- Fixed costs are excluded under variable costing while selling and administrative expenses are not product costs in nature (i.e. they are period costs).
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from Financial Accounting: Help and ReviewChapter 13 / Lesson 5