The Use of Either Absorption or Variable Costing Will Make

question 46

Multiple Choice

The use of either absorption or variable costing will make little difference in companies

• A)using just-in-time inventory methods.
• B)with large inventories.
• C)with high fixed costs.
• D)with high variable costs.

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Definitions:

Units-of-Activity Method

A depreciation method that allocates the cost of an asset over its useful life based on units of production or usage rather than time.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up during the period.

Straight-Line Method

A technique for estimating an asset's depreciation, where it's presumed the asset depreciates uniformly each year throughout its productive lifespan.

Delivery Equipment

This refers to the machinery and vehicles used for the purpose of transporting goods to customers.