The Going Rate Approach Is Based on Local Market Rates

question 9

True/False

The Going Rate Approach is based on local market rates.

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Definitions:

Variable Costing

An accounting method that includes only variable production costs (costs that vary with output) in product costs, while fixed costs are charged to the period they occur.

Operating Income

The financial gain obtained through the main functions of a firm, without considering the reductions for interest and taxes.

Absorption Costing

An approach in accounting that adds up all costs associated with manufacturing, including direct materials, workforce expenses, and all overhead costs, both variable and fixed, into the product pricing.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.