Question

LO 6.5Under variable costing, a unit of product includes which costs?

direct material, direct labor, and manufacturing overhead
direct material, direct labor, and variable manufacturing overhead
direct material, direct labor, and fixed manufacturing overhead
direct material, direct labor, and all variable manufacturing overhead

Answer 1

direct material, direct labor, and variable manufacturing overhead

Step-by-step explanation:

Under variable costing of the product cost, it includes only three costs i.e direct material cost, direct labor cost, and the variable manufacturing overhead

In mathematically,

Product cost = Direct material cost + direct labor cost + variable manufacturing overhead

And, in case of the period cost, it includes fixed manufacturing overhead, variable selling, and administration expenses, and fixed selling and administration expenses