Choice "B" is correct. Absorption costing (required for external reporting) charges direct material, direct labor, variable overhead and fixed overhead as inventoriable costs.Choices "c" and "d" are incorrect. Direct costing (also called variable costing) is the same as absorption costing except that it does not consider fixed manufacturing overhead as an inventoriable cost.Choice "a" is incorrect. Conversion costing does not include direct material in inventoriable cost.
