Which of the Following Is True of Absorption Costing

question 248

Multiple Choice

Which of the following is true of absorption costing?

• A) It assigns all manufacturing costs to the product.
• B) It is used only for internal reporting such as financial statements.
• C) It assigns only variable manufacturing costs to the product.
• D) None of these.

---

Definitions:

Operating Costs

Expenses associated with the day-to-day functions of a business, excluding costs related to producing goods or services.

Income Statement

A financial statement that shows a company's revenues and expenses over a specified period, leading to its net income or loss.

Direct Labor Cost

Expenses directly attributable to the production of goods or services, including wages and salaries for workers who physically produce products.

Cell Phone Manufacturer

A company engaged in the production of mobile phones, involving processes from design and development to assembly and testing of devices.