Question

Product costs under direct costing included.

• A. Prime cost only
• B. Prime cost and fixed factory overhead
• C. Prime cost and variable factory overhead
• D. Fixed factory overhead only

Answer 1

Answer: (C)

Prime cost and variable factory overhead

Product cost includes direct materials, direct labor, and overhead. These are the costs that are included in the cost of goods sold and inventory. Only these costs can be included in the inventory.