Direct Material and Direct Labour Costs Are Assigned to Inventory

question 73

Multiple Choice

Direct material and direct labour costs are assigned to inventory when using:
I. Absorption costing
II. Throughput costing
III. Variable costing

• A)I and III only
• B)I and II only
• C)II and III only
• D)I, II, and III

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Definitions:

Fair Value

The amount one would expect to receive from the sale of an asset or the cost to transfer a liability during a structured transaction among parties in the market as of the valuation date.

Financial Instruments

Contracts that give rise to both a financial asset of one entity and a financial liability or equity instrument of another entity, such as stocks, bonds, or derivatives.

Business Combination

A transaction or event in which an acquirer gains control over one or more businesses, typically through the acquisition of equity interests.

Fair Value

An estimate of the price at which an asset or liability could be exchanged in a current transaction between willing, unrelated parties.