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Which of the following are considered to be product costs under absorption costing? I. Variable manufacturing overhead. II. Fixed manufacturing overhead. III. Selling and administrative expenses.

Respuesta :

Answer:

I and II

Explanation:

The key costs assigned to products under an absorption costing system are:

  • Direct materials. Those materials that are included in a finished product.
  • Direct labor. The factory labor costs required to construct a product.
  • Variable manufacturing overhead. The costs to operate a manufacturing facility, which vary with production volume. Examples are supplies and electricity for production equipment.
  • Fixed manufacturing overhead. The costs to operate a manufacturing facility, which do not vary with production volume. Examples are rent and insurance.
anthougo

The following are considered to be product costs under absorption costing:

I. Variable manufacturing overhead.

II. Fixed manufacturing overhead.

Product costs refer to the costs accumulated for the manufacturing of a product.  The product costs can be accumulated under two costing systems.

The first method for accumulating product costs is the variable or marginal costing method.  With this system, only the variable costs of manufacturing are considered to be product costs.

The second method for accumulating product costs is the absorption costing method.  Under this method, both variable (direct) and fixed (indirect) manufacturing costs (for example costs of factory rent, factory administration costs, factory insurance, etc.) are included in the product costs.

Thus, Options I (variable) and II (fixed) are considered to be product costs under absorption costing while Option III is not because they are selling and administrative costs and not manufacturing costs.

Learn more about how product costs are calculated under absorption costing here: https://brainly.com/question/14667832

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