Answered

Q20. How does the absorption costing method treat fixed manufacturing overhead costs?

A. It treats them as period costs.
B. It treats them as product costs.
C. It ignores them entirely.
D. It treats them as variable costs.



Answer :

GinnyAnswer

Final answer:

The absorption costing method considers fixed manufacturing overhead costs as product costs, integral to determining the complete cost of goods produced.


Explanation:

The absorption costing method treats fixed manufacturing overhead costs as product costs. Unlike variable costs, which vary with production levels, fixed costs are considered part of the product's cost under absorption costing. By including fixed overhead costs in the product cost, the absorption costing method aims to provide a more comprehensive view of the total cost incurred in producing goods.


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