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Bluestone llc uses variable costing and absorption costing. In the variable costing income statement which of...

Bluestone llc uses variable costing and absorption costing. In the variable costing income statement which of the following is a period cost?
a) direct materials
b) direct labor
c) both a and b
d) neither a nor b
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Answer #1

In the variable costing, following costs are considered as product costs:

(i) Direct materials

(ii) Direct labor

(iii) Variable manufacturing overhead

In the variable costing, all other costs i.e fixed manufacturing overhead, fixed selling and administrative expenses and variable selling and administrative expenses are considered as period costs.

Thus, neither direct materials and nor direct labor is a period cost.

Correct option is d.

Kindly comment if you need further assistance. Thanks

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