Question: Absorption costing and variable costing are two different methods of assigning costs to units produced. Of the four cost items listed below, identify the one

Absorption costing and variable costing are two different methods of assigning costs to units produced. Of the four cost items listed below, identify the one that is not correctly accounted for as a product cost.

Part of Product

Cost under

Absorption

Costing

Variable

Costing

Manufacturing supplies

Part of ProductCost under AbsorptionCosting

Yes

VariableCosting

Yes

Direct labor cost

Part of ProductCost under AbsorptionCosting

Yes

VariableCosting

Yes

Packaging and shipping costs

Part of ProductCost under AbsorptionCosting

Yes

VariableCosting

Yes

Insurance on factory

Part of ProductCost under AbsorptionCosting

Yes

VariableCosting

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