In throughput costing, the variable manufacturing overhead and direct manufacturing labor cost must be treated as ___________?
Correct answer: C. period costs
- A. accrual cost
- B. incurred cost
- C. period costs
- D. setup costs
Explanation
Throughput costing treats direct material as the only product cost. Variable manufacturing overhead and direct manufacturing labor are therefore period costs charged against the current period's revenue.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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