Under Absorption Costing, What Amount of Fixed Overhead Is Deferred

question 4

Multiple Choice

Under absorption costing, what amount of fixed overhead is deferred to a future period?

• A)$70,000
• B)$75,000
• C)$225,000
• D)$300,000

---

Definitions:

Period Costs

Period costs are expenses that are not directly tied to production activities and are expensed in the period they are incurred; examples include administrative salaries and marketing costs.

Value Chain

The series of activities and processes that a company performs to add value to its product or service, from raw materials to final product delivery.

Management Functions

Fundamental tasks carried out by managers to achieve organizational goals, typically including planning, organizing, leading, and controlling.

Industry Averages

Statistical metrics that summarize the average performance, behavior, or characteristic of companies within a specific industry.