Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

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Multiple Choice

Under variable costing, which manufacturing costs are treated as product costs?

All manufacturing and non-manufacturing costs

Only variable manufacturing costs

Both variable and fixed manufacturing costs

Only fixed manufacturing costs

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Verified step by step guidance

Understand the concept of variable costing: Variable costing is a method of costing where only variable manufacturing costs are treated as product costs. Fixed manufacturing costs are considered period costs and are expensed in the period incurred.

Identify the types of manufacturing costs: Manufacturing costs include direct materials, direct labor, and manufacturing overhead. These can be further classified into variable costs (e.g., costs that change with production volume) and fixed costs (e.g., costs that remain constant regardless of production volume).

Focus on variable manufacturing costs: Under variable costing, only costs that vary directly with production, such as direct materials, direct labor, and variable manufacturing overhead, are treated as product costs.

Exclude fixed manufacturing costs: Fixed manufacturing costs, such as factory rent or salaries of production supervisors, are not included in product costs under variable costing. Instead, they are treated as period costs and expensed in the income statement during the period they are incurred.

Compare variable costing to absorption costing: In absorption costing, both variable and fixed manufacturing costs are treated as product costs. Understanding this distinction helps clarify why only variable manufacturing costs are considered product costs under variable costing.