Assume the same facts as the previous example, but now assume the company uses a variable costing method.

Previous example

The Central Corp. is a manufacturer. It made the following expenditures in February. Assuming it uses the absorption costing method, which types of cost become part of the cost of its finished goods inventory?

A. Direct labor cost, for people working on the products.

B. Direct materials cost, for materials that become part of the product.

C. Variable overhead cost, for other costs that vary directly with the amount produced.

D. Fixed overhead costs.