A Small Company Has One Factory and Produces Only One

question 7

Multiple Choice

A small company has one factory and produces only one product,although production fluctuates weekly according to demand.
It has a range of fixed and variable costs.
Which of the following statements about Absorption Costing is Correct?

• A) As there is only one product, absorption costing is unnecessary. The unit cost will always be the same.
• B) Absorption costing is necessary for stock valuation, although unit cost will vary with production.
• C) As there is only one product, absorption costing is unnecessary. The total cost will always be the same.
• D) Absorption costing is necessary for stock valuation, but the unit cost will always be the same.

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Definitions:

Competitive

Having a strong desire to be more successful than others, often leading to striving for achieving superiority or winning in a situation.

Social Categorization

The cognitive process where individuals classify others into groups based on shared traits or characteristics, influencing perception and interaction.

Controlled Process

A thoughtful, deliberate type of thinking that requires focus and awareness, often contrasted with automatic processes.

Depersonalized

Depersonalized describes situations or interactions where individual identities and personal qualities are disregarded, treating people as undifferentiated parts of a group.