The computation of absorption costing gross profit always involves subtracting:
A)all current-year fixed manufacturing overhead.
B)some, but not all, current-year fixed manufacturing overhead.
C)all fixed manufacturing overhead applied to units sold in the current year.
D)no fixed manufacturing overhead.
E)variable cost of goods sold.

Question

Quizplus · Accepted Answer

Absorption costing includes all fixed manufacturing overhead applied to units sold in the current year in the calculation of gross profit. This is because absorption costing considers fixed overhead as a product cost that is included in the cost of goods sold.

The Computation of Absorption Costing Gross Profit Always Involves Subtracting