Under the Absorption Cost Approach, All of the Following Are

question 98

Multiple Choice

Under the absorption cost approach, all of the following are included in the cost base EXCEPT

• A)direct materials.
• B)fixed manufacturing overhead.
• C)selling and administrative costs.
• D)variable manufacturing overhead.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company; this amount includes the cost of the materials and labor directly used to create the product.

Merchandise Inventory

Goods available for sale to customers, which can include both purchased products and those manufactured by the company.

Monthly Expenses

Recurring costs incurred by a business or individual that are expected and budgeted on a monthly basis.

Accounts Payable

The amounts a company owes to suppliers for goods and services purchased on credit.