The Absorption-Cost Approach Is Used by Most Companies for All

question 120

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.

Identify and correct speech patterns that reduce the effectiveness of communication.

Comprehend the proper format for initiating professional phone calls.

Understand the importance of establishing rules for business meetings proactively.

Understanding the characteristics and implications of issuing preference shares.

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Definitions:

Downstream Division

The part of a company or industry involved in the later stages of the production process, including distribution and retail.

Transfer Price

The price at which goods and services are sold between divisions within the same company, often used for budgetary and accounting purposes.

Buying Division

A specialized department within a company responsible for making purchase decisions and executing transactions.

Selling Division

A specialized department within a company responsible for overseeing and implementing sales strategies.