Suppose That a Shipment of Products Destined for a Particular

question 21

True/False

Suppose that a shipment of products destined for a particular retailer is lost or damaged. If these products were going into general inventory replacement stock, then the retailer is entitled to recover the wholesale price plus freight costs (if they were paid).

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and both variable and fixed overheads) in the price of a product.

Variable Costing

An accounting method that includes all variable production costs (materials, labor, overhead) in product costs but treats fixed overhead expenses as period costs.

Reconciliation

The process of ensuring two sets of records (usually the balances of two accounts) are in agreement.

Variable Costing

A costing method where only variable production costs are included in product costs, with fixed overhead expenses treated as period costs.