A Reliable Cost Accounting System Is Necessary for Accurate Pricing

question 47

Multiple Choice

A reliable cost accounting system is necessary for accurate pricing. The traditional method of product costing, where the costs of direct materials, direct labor, and factory overhead are included in a finished product's total cost is called ________.

• A)absorption costing
• B)break-even pricing
• C)direct costing
• D)absorption pricing

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Definitions:

Fixture

An item of personal property that has been attached to land or a building in such a way that it is considered legally to be a part of the property.

Attached Item

denotes an object or document that is physically or electronically linked to another item for reference or clarification.

Implied Warranty

A legal assumption that goods or services sold meet certain quality standards, even if not explicitly stated in a contract.

Latent Defects

Hidden problems or flaws in a property that are not discoverable by reasonable inspection before purchase.