Which of the following statements is correct using the direc

Which of the following statements is correct using the direct costing concept?

A) All manufacturing costs are considered period costs.

B)Only variable manufacturing costs are included in the calculation of cost of goods manufactured while fixed costs are considered period costs.

C)All manufacturing costs are included in the calculation of cost of goods manufactured.

D)Only fixed costs are included in the calculation of cost of goods manufactured while variable costs are considered period costs.

Solution

Direct costing concept : Direct costing is a costing which included only direct cost for cost of goods manufactured.

it does not includes any relevant cost for cost of goods manufactured.

so answer is b) B)Only variable manufacturing costs are included in the calculation of cost of goods manufactured while fixed costs are considered period costs.