Which Inventory Costing Method Treats Direct Labour as a Product

question 33

Multiple Choice

Which inventory costing method treats direct labour as a product cost?

• A)Absorption costing
• B)Variable costing
• C)Throughput costing
• D)Both (a)and (b)

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Definitions:

Top-Down Managerial Approach

This approach in management involves decision-making and directive processes originating from the upper echelons of the organization hierarchy and flowing downward.

Budget Preparation

The process of estimating future financial performance and resource requirements, forming the basis of a financial plan.

Sales Budget

An estimate of the expected total sales revenue and the necessary selling expenses for a specific period, often broken down by product line or category.

Production Budget

An estimation of the costs associated with the production process, including raw materials, labor, and overhead expenses, for a specific period.