Under absorption costing, which cost is included in the cost of finished goods inventory?
Correct answer: C. Fixed manufacturing overhead
- A. Office rent for administration
- B. Selling commission on sales
- C. Fixed manufacturing overhead
- D. Interest on business loans
Explanation
Absorption costing assigns both variable and fixed manufacturing costs to products. Selling, administrative and financing costs are normally treated as period costs rather than inventory costs.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
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.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
If total variable cost is Rs. 240,000 for 12,000 units, what is the variable cost per unit?
A cost that management can significantly influence within a given period is called a:
Activity-based costing assigns overhead primarily on the basis of:
Which cost is best described as a semi-variable cost?
What is the main purpose of establishing a cost centre?
In process costing, how is the cost of a normal process loss generally treated?