Direct (Variable)costing Includes in the Unit Cost of a Product

question 60

True/False

Direct (variable)costing includes in the unit cost of a product only those costs that vary with the quantity of units produced.

---

Definitions:

Direct Materials

Raw materials used directly in the production of a product, whose costs are easily traced to that product.

First-In, First-Out

An accounting method where the earliest acquired goods are sold or used first.

Conversion Cost Per Equivalent Unit

This is the cost incurred during the manufacture of a product that includes both direct labor and manufacturing overhead costs, divided by the number of equivalent units produced.

Work In Process-Assembly

Items in a manufacturing process that have been partially completed but are not yet finished goods.