The Absorption Cost Approach Is Used by Most Companies for All

question 3

Multiple Choice

The absorption cost approach is used by most companies for all of the following reasons EXCEPT that

• A)absorption cost information is readily provided by a company's cost accounting system.
• B)absorption cost provides the most defensible bases for justifying prices to interested parties.
• C)basing prices on only variable costs could encourage managers to set too low a price to boost sales.
• D)this approach is more consistent with cost-volume-profit analysis.

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Definitions:

Conclusion

The end or finish of an event, process, or text; a judgment or decision reached by reasoning.

Logical Relationship

The connection between ideas that follows a systematic pattern of reasoning, often governed by specific rules or laws of logic.

Pragmatic Reasoning

Thinking that applies practical and context-specific criteria to decision-making or problem-solving.

Syllogistic Reasoning

A form of deductive reasoning where a conclusion is drawn from two given or assumed premises, each of which shares a common term not present in the conclusion.