A Disadvantage of Absorption Costing Is

question 40

Multiple Choice

A disadvantage of absorption costing is

• A) that it is not a useful format for decision making.
• B) that it assigns only manufacturing costs to the product.
• C) All of these.
• D) None of these.

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Definitions:

Total Revenue

Total Revenue is the entire amount of money earned by a firm from the sale of its goods or services before any costs or expenses are deducted.

Purely Competitive Firm

A business that operates in a market where there are many sellers and buyers, the product is homogeneous, and there is free entry and exit from the market.

Units of Output

The quantity of goods or services produced by a company, industry, or economy within a specific period.

Marginal Revenues

The extra earnings accrued by selling an additional unit of a good or service.