The cost of a product in inventory under variable costing has elements of fixed overhead cost.Select one:TrueFalse

Answering the Question

The statement "The cost of a product in inventory under variable costing has elements of fixed overhead cost" is False.

Explanation

1. Understanding Variable Costing: Under variable costing, only variable manufacturing costs are included in the cost of a product. These costs typically include direct materials, direct labor, and variable manufacturing overhead.

2. Treatment of Fixed Overhead: Fixed manufacturing overhead costs are treated as period costs under variable costing. This means that they are not assigned to individual units of inventory; instead, these costs are expensed in full during the period incurred.

3. Conclusion: Therefore, since fixed overhead costs are not included in the inventory valuation under variable costing, the statement is incorrect.

In summary, the correct answer is False because variable costing excludes fixed overhead costs from product costs in inventory.