Which of the Following Statements Is Correct? Overhead Absorption Is

question 1

Multiple Choice

Which of the following statements is correct? Overhead absorption is a way of:

• A) Apportioning overhead costs between cost centres
• B) Allocating an appropriate portion of overhead costs to cost units
• C) Classifying costs as either direct or indirect
• D) Apportioning non-production overheads between service departments

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Definitions:

Budget Line

A graphical representation that shows all possible combinations of two goods that can be purchased with a given income and prices.

Commodity 1

A generic term for a raw material or primary agricultural product that can be bought and sold, such as copper or coffee.

Commodity 2

Typically refers to a basic good used in commerce that is interchangeable with other goods of the same type.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.