US CMA Part 1 · Chapter 4 · Question 3 of 22
Which cost is treated as a product cost under absorption costing but as a period cost under variable costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Fixed manufacturing overhead
Explanation
The only difference between the two methods is the treatment of fixed manufacturing overhead, which absorption costing assigns to units and variable costing expenses in the period incurred. Direct materials and variable overhead are product costs under both, and selling and administrative costs are period costs under both.
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