Assuming That Direct Labor Is a Variable Cost, the Primary

question 116

Multiple Choice

Assuming that direct labor is a variable cost, the primary difference between the absorption and variable costing is that:

• A) variable costing treats only direct materials and direct labor as product cost while absorption costing treats direct materials, direct labor, and the variable portion of manufacturing overhead as product costs.
• B) variable costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs while absorption costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs.
• C) variable costing treats only direct materials, direct labor, the variable portion of manufacturing overhead, and the variable portion of selling and administrative expenses as product cost while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs.
• D) variable costing treats only direct materials, direct labor, and the variable portion of manufacturing overhead as product costs while absorption costing treats direct materials, direct labor, the variable portion of manufacturing overhead, and an allocated portion of fixed manufacturing overhead as product costs.

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Definitions:

Virginia State College

A public historically black university located in Petersburg, Virginia, focused on a wide range of academic disciplines.

Structuralists

Early psychologists who analyzed the basic elements of thoughts and sensations to understand the structure of the mind.

Introspection

The examination of one's own conscious thoughts and feelings.

Edward Titchener

A British psychologist, who is best known for developing the school of thought known as structuralism, which aimed to understand the structure of the mind by analyzing its components.