Answer (A) is correct . Full absorption costing treats fixed factory overhead costs as product costs. Thus, inventory and cost of goods sold include (absorb) fixed factory overhead.
Answer (B) is incorrect because Marginal costing considers only the incremental costs of producing an additional unit of product. In most cases marginal costs are variable costs.
Answer (C) is incorrect because Direct (variable) costing treats only variable costs as product costs.
Answer (D) is incorrect because Direct (variable) costing treats only variable costs as product costs.
|
