Which Cost Is NOT Included in Inventory Using the Absorption

question 78

Multiple Choice

Which cost is NOT included in inventory using the absorption costing method?

• A) direct labour
• B) direct materials
• C) fixed selling expenses
• D) fixed manufacturing overhead

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Definitions:

Profit-maximizing Output

The level of production at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.

Total Cost

The sum of all costs required to produce a certain amount of a good or service, including fixed and variable costs.

Duopoly

A two-firm oligopoly.

Demand Curve

A graph depicting the relationship between the price of a good and the quantity demanded by consumers, typically sloping downwards from left to right.