Which of the Following Is TRUE Concerning Throughput Costing

question 13

Multiple Choice

Which of the following is TRUE concerning throughput costing?

• A)It is also called super-absorption costing.
• B)It treats all costs except those related to direct labour as period costs.
• C)It provides more incentive to build-up inventories than does absorption costing.
• D)It provides more incentive to build-up inventories than does variable costing.
• E)Other things being equal, is more conservative than absorption costing.

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Definitions:

Aggregate Demand

The sum of all demand for products and services in an economy, indicating the total spending on goods and services at each price level.

Equilibrium Output

The level of output at which the quantity of goods produced equals the quantity of goods consumed in an economy, with no external pressures to change.

Short-Run Aggregate Supply Curve

A graphical representation showing the positive relationship between the total production of goods and services (aggregate supply) and the price level in the short term.

Expansionary Gap

A situation where the real GDP is higher than the potential GDP, often leading to inflationary pressures as demand outstrips supply.