The Method of Costing That Excludes Fixed Manufacturing Costs from Inventorial

question 48

Multiple Choice

The method of costing that excludes fixed manufacturing costs from inventorial costs is known as

• A) absorption costing.
• B) fixed overhead costing.
• C) manufacturing overhead costing.
• D) variable costing.
• E) full manufacturing costing.

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Definitions:

Year

A period of approximately 365 days used for calculating time in most of the world, divided into 12 months.

Working Capital

Current assets minus current liabilities, indicating the liquidity of a business and its ability to meet short-term obligations.

Current Ratio

An indicator of how well a company can fulfill its short-term financial liabilities using assets that are readily convertible to cash.

Acid-Test Ratio

A financial metric that measures a company’s ability to pay off its current liabilities with only quick assets, excluding inventory.