Question 1
Which of the following costs will be treated as period costs under absorption costing?
◦ raw materials used in the production
◦ sales commission paid on sale of product
◦ depreciation on factory equipment
◦ rent for factory building
Question 2
Which of the following is true of absorption costing?
◦ It expenses marketing costs as cost of goods sold.
◦ It treats direct manufacturing costs as a period cost.
◦ It includes fixed manufacturing overhead as an inventoriable cost.
◦ It treats indirect manufacturing costs as a period cost.