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

a) Direct labor (DL)
b) Direct materials (DM)
c) Variable selling and administrative (VSA)
d) Variable manufacturing overhead (VOH)
e) Fixed selling and administrative (FSA)
f) Fixed manufacturing overhead (FOH)

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Answer:

a) Direct labor (DL)

b) Direct materials (DM)

d) Variable manufacturing overhead (VOH)

f) Fixed manufacturing overhead (FOH)

Explanation:

Absorption costing method allocates to a product the direct costs: direct labor used in the production process, and the direct raw materials that were transformed into the product, and also allocates the two types of manufacturing overhead: variable and fixed.

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