Under Absorption Costing

question 1

Multiple Choice

Under absorption costing:

• A)Only direct variable manufacturing costs are inventoriable.
• B)Only direct fixed manufacturing costs are inventoriable.
• C)All manufacturing costs are inventoriable.
• D)No manufacturing costs are inventoriable.

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Definitions:

Competitive Increasing-cost Industry

An industry in which the entry of new firms causes the input prices to increase, leading to upward-sloping supply curves for the firms.

Long-run Equilibrium

A state in economics where all factors of production are fully adjusted to the market condition and all economic agents have no incentive to change their behavior.

Consumer Demand

The desire and willingness of consumers to purchase a certain quantity of goods or services at various price points, at a particular time.

Competitive Increasing-cost Industry

An industry where supply costs increase as output expands, often because resources become scarcer or harder to obtain as production grows.