Product Costs,such as Factory Overhead,should Be Treated as an Asset

question 142

True/False

Product costs,such as factory overhead,should be treated as an asset until the product is sold.

---

Definitions:

Variable Costing

A method of accounting that comprises solely of variable production expenses, such as direct materials, direct labor, and variable manufacturing overhead, in the calculation of product costs.

Variable Costing

An accounting method that includes only variable costs (costs that change with production levels) in product costs and treats fixed costs as period expenses.

Unit Product Cost

The total cost incurred to produce, store, and sell one unit of a product, including material, labor, and overhead.

Absorption Costing

A bookkeeping strategy that includes the total manufacturing expenses - direct materials, direct labor, and all overhead costs, both variable and fixed - in determining the cost of a product.