Under Absorption Costing and Variable Costing, How Are Direct Labor

question 82

Short Answer

Under absorption costing and variable costing, how are direct labor costs treated? $$\begin{array} { l l l } & \text { Absorption } & \text { Variable } \\\text { a. } & \text { Product Cost } & \text { Product Cost } \\\text { b. } & \text { Product Cost } & \text { Period Cost } \\\text { c. } & \text { Period Cost } & \text { Product Cost } \\\text { d. } & \text { Period Cost } & \text { Period Cost }\end{array}$$

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, typically reported in financial statements.

Account Receivable

Money owed to a business by its clients for goods or services that have been delivered but not yet paid for.

Schedule Analysis

A method used to examine and interpret the timing and amounts of future cash flows, expenses, or revenues.

Independent Items

Elements or transactions that do not influence or are not influenced by other items within a financial statement or business process.