1. Absorption costing is also known as all of the following EXCEPT a. Variable c
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Question
1. Absorption costing is also known as all of the following EXCEPT
a. Variable costing
b. Full costing
c. Traditional approach
d. Functional approach.
2. The distinction between absorption costing and variable coting is most important for which type of industry?
a. Manufacturing
b.Marketing
c. Retail
d. Service
3. When only direct manufacturing costs and variable manufacturing overhead costs are included as inventoriable cost, the method being used is
a. Absorption costing
b. Fixed overhead costing
c. Manufacturing overhead costing
d. Variable costing.
4. Variable costing regards fixed manufacturing overhead as
a.An unexpired cost
b.An inventoriable cost
c. charge against sales.
d. A product cost.
5. When the distinction between variable and fixed costs is one of the important elements in the preparation of the income statement, the method used should be the
a. Capitalization method
b. Contribution margin method.
c. Gross margin method.
d. Inventoriable method.
Explanation / Answer
1. Option a - variable costing
Explanation:
Absorption costing is different from variable costing . In absorption costing(also known as full costing, traditional approach,and functional approach) , direct material, direct labour and manufacturing overhead (variable +fixed) are considered as product cost.
In variable costing , direct material, direct labour and variable manufacturing overhead are considered as product cost.
2. Option a - manufacturing
3. Option d - variable costing
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