Overview of Absorption and Variable Costing
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Overview of Absorption and Variable Costing

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Questions and Answers

Which costing method treats the costs of all manufacturing components as inventoriable or product costs?

  • Marginal costing
  • Absorption costing (correct)
  • Direct costing
  • Variable costing

    • Under absorption costing, where are the costs of nonmanufacturing areas of the organization considered?

  • Inventoriable costs
  • Administrative expenses
  • Period costs (correct)
  • Product costs

    • How does absorption costing present expenses on an income statement?

  • According to their functional classifications (correct)
  • As separate fixed and variable costs
  • Based on their variability
  • By their contribution margins

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