Absorption Costing

question 65

Multiple Choice

Absorption costing:

• A)is complete pricing in that it takes into consideration all manufacturing and overhead costs.
• B)guarantees the manufacturer a desired profit margin.
• C)does not encourage a manufacturer to operate efficiently.
• D)clouds the true relationship of price,volume,and costs.

---

Definitions:

Fair Value

An approximation of the cost at which an asset or liability might be purchased or sold in a present-day deal between agreeable participants.

Excess Amortization

The portion of amortization expenses that exceeds the cash or profit generated by the asset being amortized, typically relevant in high depreciation contexts.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, without having control over those policies.