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of the following best describes costs assigned to the product under the absorption costing method?

Direct labor (OL)
Direct materials (DM)
Variable selling and administrative (VSA)
Variable manufacturing overhead (VOH)
Fixed selling and administrative (FSA)
Fixed manufacturing overhead (FOH)
A) DL. DM, VSA, and Von
B) DL DM, and VOH
C) DL DM, VOH, and FOH
D) DL and DM.
E) DL DM, FSA, and FOH.

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Answer:

C) OL, DM, VOH, and FOH

Explanation:

In the absorption costing method, the following costs are included in the final product:

  • Direct labor (OL) - The direct human labor costs of producing the product. For example, in car factory, this would be the wage of the plant workers.
  • Direct materials (DM) - The costs of the raw materials, for a car factory: steel, tires, electronics.
  • Variable manufacturing overhead (VOH) - Costs that vary depending on production. For the car factory, an example would be the energy bill.
  • Fixed manufacturing overhead (FOH) - Costs that do not vary with production. For the car factory, this would be the cost of renting the plant.

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