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:

Potential Topics

Subjects or areas that could be explored or discussed in a given context, such as during research, presentations, or brainstorming sessions.

Skill

The ability to do something well, developed through practice and knowledge.

Multiple Intelligences

A theory proposed by Howard Gardner, suggesting that intelligence is not a single entity but a plurality of eight different kinds of intelligences, including linguistic, logical-mathematical, and spatial.

Violinist

A musician who plays the violin, a four-stringed instrument played with a bow.