Absorption Costing Is a Management Accounting Technique Where

question 4

Multiple Choice

Absorption costing is a management accounting technique where:

• A) Indirect manufacturing costs are spread fairly across the range of products.
• B) Products include a share of all the costs of the business.
• C) Fixed costs are spread fairly across a range of products.
• D) Indirect expenses are charged to all departments.

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Definitions:

Benchmark Risk

The risk associated with not being able to meet or exceed the performance of a benchmark index or standard.

Treynor-Black Portfolio

A portfolio optimization model that blends a passive (market index) portfolio and an actively managed portfolio to achieve superior returns.

Sharpe Measure

A ratio used to evaluate the risk-adjusted return of an investment portfolio, by comparing its excess returns to the volatility of those returns.

Active Portfolio Managers

Investment professionals who make regular buy, hold, and sell decisions in an attempt to outperform standard benchmarks.