Which of the Following Is a Reason for Companies to Use

question 140

Multiple Choice

Which of the following is a reason for companies to use absorption costing for internal accounting?

• A) It is the required inventory method for internal accounting as per GAAP.
• B) It measures the cost of all resources, whether manufacturing or nonmanufacturing, necessary to produce inventory.
• C) It does not take into account fixed manufacturing overhead while valuing inventory and hence is more suited for decision making.
• D) It can help prevent managers from taking actions that make their performance measure look good but that hurt the income they report to shareholders.

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Definitions:

Normally Distributed

Describes a probability distribution that is symmetrical around the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.

Confidence Interval

A scope of values, sourced from statistical analysis of a sample, that is believed to contain the value of an undisclosed population parameter.

Margin of Error

An expression of the amount of random sampling error in a survey's results, indicating a range within which the true value lies with a certain level of confidence.

Parking Fees

Charges applied for the use of parking space for vehicles within a designated area or facility.