Q1SE Classifying costs Classify each ... [FREE SOLUTION]

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Chapter 21: Q1SE (page 1167)

Classifying costs Classify each cost by placing an X in the appropriate columns. The first cost is completed as an example.
Absorption Costing Variable Costing Product Cost Period Cost Product Cost Period cost
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Variable selling and administrative costs
Fixed selling and administrative cost

Short Answer

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Answer

The classification of cost is given in the table below.

Step by step solution

Absorption costing Vs. Variable costing

Absorption costing absorbs all manufacturing costs including fixed manufacturing overheads. Variable costing only allocates variable costs to the product, fixed manufacturing overhead is classified as a period cost under variable costing.

Classification of cost

	Absorption Costing	Variable Costing
Product Cost	Period Cost	Product Cost	Period Cost
a. Direct materials	X		X
b. Direct labor	X		X
c. Variable manufacturing overhead	X		X
d. Fixed manufacturing overhead	X			X
e. Variable selling and administrative costs		X		X
f. Fixed selling and administrative cost		X		X