Under Full-Absorption Costing

question 34

Multiple Choice

Under full-absorption costing,

• A)companies can increase income by increasing the number of units produced
• B)all product and period costs are included in cost of goods sold
• C)only costs that vary per unit are included in cost of goods sold
• D)only direct material costs are included in cost of goods sold

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Definitions:

Probability

The likelihood of a particular event happening.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because another party bears the consequences or costs.

Taxi Driver

An individual who operates a car for hire to transport passengers as a profession.

Piece-rate Garment Worker

describes an employee in the clothing manufacturing sector who is paid based on the number of pieces or units they produce, rather than receiving an hourly wage.