When management uses the absorption costing approach, fixed manufacturing overhead costs are classified as which of the following types of costs?
When management uses the absorption costing approach, fixed manufacturing overhead costs are classified as which of the following types of costs?
When management uses the absorption costing approach, fixed manufacturing overhead costs are classified as indirect product costs. This is because they are not directly traceable to specific units of production but are allocated to the cost of goods produced. Unlike direct costs, which can be attributed directly to individual units, indirect costs support the manufacturing process as a whole and must be distributed across all units produced.
Under absorption costing fixed manufacturing overhead is allocated to the units produced and it is best classified as an indirect product cost. It is indirect because it is not directly traceable to a specific unit and a product cost because it allocated to the product.
It is DEFINITELY B, guys. (Per gleim)
B is correct answer
B is correct answer
B right
B is correct. It will never be a direct cost because it is an overhead.
D is correct answer