The ________ Approach Is Useful for Short-Run Pricing Decisions and the ________

question 82

Multiple Choice

The ________ approach is useful for short-run pricing decisions and the ________ approach is useful for long-run pricing decisions.

• A) contribution; absorption
• B) absorption; contribution
• C) full costing; target costing
• D) full costing; contribution

---

Definitions:

Single Plantwide Overhead Rate

A cost allocation method that applies the same overhead rate to all products, regardless of the department where they were produced or the amount of overhead they actually incurred.

Machine Hours

A metric used to allocate manufacturing overhead costs to individual products based on the number of hours the machines are run to produce them.

Fabrication Department

A division or unit within a manufacturing firm dedicated to the assembly or production of goods, where raw materials are transformed into finished products.

Multiple Department Rate System

An accounting system used to allocate indirect costs to individual departments based on varying rates, reflecting the different resource usage in each department.