Asked by Michaela Pfaff on Apr 24, 2024
Verified
Which of the following statements is true regarding absorption costing?
A) It is not the traditional costing approach.
B) It is not permitted to be used for financial reporting.
C) It is not permitted to be used for tax reporting.
D) It assigns all manufacturing costs to products.
E) It requires only variable costs to be treated as product costs.
Absorption Costing
Absorption costing is a costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.
Manufacturing Costs
Expenditures that are directly tied to the production of goods, including raw materials, labor, and overhead expenses.
Financial Reporting
The process of producing statements that disclose an organization's financial status to management, investors, and the government.
- Understand the difference between absorption costing and variable costing.
- Identify the costs included in product costs under both costing methods.
Verified Answer
Learning Objectives
- Understand the difference between absorption costing and variable costing.
- Identify the costs included in product costs under both costing methods.
Related questions
Using Absorption Costing,which of the Following Manufacturing Costs Are Assigned ...
Which of the Following Best Describes Costs Assigned to the ...
Which of the Following Best Describes Costs Assigned to the ...
Which of the Following Statements Is Correct Using the Direct ...
In Henkel Company 50000 Units Are Produced and 40000 Units \(\begin{array}{cc} \text ...