Which of the Following Is a Reason for Companies to Use

question 140

Multiple Choice

Which of the following is a reason for companies to use absorption costing for internal accounting?

• A) It is the required inventory method for internal accounting as per GAAP.
• B) It measures the cost of all resources, whether manufacturing or nonmanufacturing, necessary to produce inventory.
• C) It does not take into account fixed manufacturing overhead while valuing inventory and hence is more suited for decision making.
• D) It can help prevent managers from taking actions that make their performance measure look good but that hurt the income they report to shareholders.

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Definitions:

Productivity

The efficiency with which an individual, organization, or economy converts inputs into useful outputs.

Stress-Related Illnesses

Health issues directly influenced or exacerbated by stress, including mental and physical conditions.

Occupational Safety and Health Act

A law passed to ensure worker and workplace safety by setting and enforcing standards; oversees occupational health and safety in the United States.

OSHA

The Occupational Safety and Health Administration, a federal agency responsible for ensuring safe and healthful working conditions by setting and enforcing standards.