Absorption Costing Measures Contribution to Operating Profit As

question 94

Multiple Choice

Absorption costing measures contribution to operating profit as:

• A) Sales less unit level costs spent on goods sold.
• B) Sales less variable cost of goods sold.
• C) Sales less absorption cost of goods sold.
• D) Sales less all costs including operating expenses.

---

Definitions:

Cost Formula

An equation used to predict costs, often relating total costs to the level of activity or volume of output.

Selling

The process of promoting and exchanging goods or services for money.

Administrative Expenses

Administrative Expenses are costs related to the general operations and administration of a business that are not linked directly to the manufacturing or selling of products or services.

Fixed Inspection Cost

A cost that remains constant for a specific period regardless of the level of goods produced or inspected.