Under standard absorption costing, fixed manufacturing overhead is treated as a:
APeriod Cost
BOpportunity Cost
CProduct Cost
DSunk Cost
Explanation
* Absorption Costing includes fixed manufacturing overhead in inventory product cost.
* Variable Costing treats fixed manufacturing overhead as a period expense charged entirely in the period incurred.
* Absorption costing is mandatory for external reporting under GAAP/IFRS.
Exam Relevance
- Topic: Cost Accounting
- Subtopic: Absorption vs Variable Costing

No Comments