Question

Fixed manufacturing overhead costs are expensed as units are sold as part of cost of goods sold under (1) costing, and expensed in full with period costs under (2) costing. (Enter only one word per blank.)

Answer 1

Fixed manufacturing overhead costs are expensed as units are sold under (1) costing and expensed in full under (2) costing as period costs.

Step-by-step explanation:

Fixed manufacturing overhead costs are expensed as units are sold as part of cost of goods sold under (1) costing, and expensed in full with period costs under (2) costing. In (1) costing, the fixed manufacturing overhead costs are allocated to each unit of product based on a predetermined rate. This rate is calculated by dividing the total fixed manufacturing overhead costs by the total number of units expected to be produced. As units are sold, the allocated fixed manufacturing overhead costs are included in the cost of goods sold. On the other hand, in (2) costing, the fixed manufacturing overhead costs are treated as period costs and are expensed in full in the period in which they are incurred. These costs are not allocated to the units of product.