When Calculating the Absorption-Costing Income for External Reporting, All

question 129

Multiple Choice

When calculating the absorption-costing income for external reporting, all

• A)manufacturing costs ultimately become nonmanufacturing costs.
• B)manufacturing costs are product costs and product costs are never expensed.
• C)costs of selling manufactured products are classified as product costs.
• D)selling and administrative costs are classified as nonmanufacturing costs.

---

Definitions:

Security

A financial instrument representing ownership in a publicly-traded corporation (stock), a creditor relationship with a government or corporation (bond), or rights to ownership as represented by an option.

Rate of Return

The profit or deficit from an investment during a designated time frame, represented as a fraction of the investment's initial value.

Security Market Line

A graphical representation that shows the relationship between the risk of an investment and its expected return, based on the capital asset pricing model.

Expected Return-Beta Relationship

The concept that the expected return of an investment is dependent on its beta, which measures its systemic risk relative to the overall market.