Question

When all fixed manufacturing costs and variable manufacturing costs are included as inventoriable costs, the method being used is Select one:

A. direct costing.
B. variable costing.
C. fixed overhead costing.
D. absorption costing.
E. manufacturing overhead costing.

Answer 1

The method being used when all fixed and variable manufacturing costs are included as inventoriable costs is absorption costing.

Step-by-step explanation:

The method being used when all fixed manufacturing costs and variable manufacturing costs are included as inventoriable costs is absorption costing.

Absorption costing is a method of accounting where all manufacturing costs, both fixed and variable, are allocated to the cost of a product and become part of the inventory until the product is sold.

For example, if a company incurs $100 of fixed manufacturing costs and $200 of variable manufacturing costs for producing a product, the total cost of the product under absorption costing would be $300. This $300 is then assigned to the inventory and is included as part of the cost of goods sold when the inventory is sold.