The Reporting Method That Includes in the Cost of Inventory

question 130

Multiple Choice

The reporting method that includes in the cost of inventory (and cost of goods sold) all product costs,including both fixed and variable costs,is known as:

• A) variable costing.
• B) total costing.
• C) direct costing.
• D) absorption costing.

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Definitions:

Electricity

A form of energy resulting from the existence of charged particles, used as a power source.

Variable Component

Denotes a part of a cost or expense that varies directly with the level of activity or output.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing with the level of production or sales but not in direct proportion.

Electrical Cost

The expense associated with the consumption of electrical energy or the cost related to electrical work in construction or maintenance.