Because Absorption Costing Capitalises Fixed Manufacturing Overhead Costs to Inventory

question 99

True/False

Because absorption costing capitalises fixed manufacturing overhead costs to inventory, managers using it may build up inventories unnecessarily.

---

Definitions:

Halo Effect

A psychological phenomenon where an individual's overall impression of a person, brand, or product positively influences their feelings and thoughts about that entity's specific traits.

Strictness

The quality of exacting standards or stringent enforcement of rules, often applied in disciplinary contexts.

Performance Appraisals

The process of evaluating an employee's job performance and productivity in relation to established criteria and organizational objectives.

Labour Market

The labour market is the arena in which employers seek employees to hire and where individuals offer their skills and labor in exchange for wages.