Which of the Following Statements Is True of Absorption Costing

question 122

Multiple Choice

Which of the following statements is true of absorption costing?

• A) Absorption costing allocates fixed manufacturing overhead to actual units produced during the period.
• B) Absorption costing carries over nonmanufacturing costs to the future periods.
• C) Absorption costing shows the same level of profit as variable costing irrespective of the level of inventories.
• D) Absorption costing allocates total manufacturing cost using the budgeted level of production for a particular year.

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Definitions:

Conventional Values

Traditional beliefs or norms that are widely accepted within a society or among members of a particular group.

Recognized Authority

An individual or institution regarded as being knowledgeable or having official power in a particular field.

External Locus

A psychological perspective where an individual believes that control over their life events and outcomes lies outside themselves.

Control Fate

The concept of having influence or control over the outcomes of one's actions or the direction of events in one's life or environment.