Under absorption costing
A)only the quantity of products sold determines cost of goods sold.
B)only the quantity of products produced determines cost of goods sold.
C)both the quantity of products produced and sold determines cost of goods sold.
D)neither the quantity of products produced or sold determines cost of goods sold.

Question

Quizplus · Accepted Answer

Under absorption costing, both the quantity of products produced and sold determines cost of goods sold. This is because absorption costing includes all manufacturing costs in the cost of goods sold, including fixed manufacturing overhead costs that are allocated to each unit produced. Therefore, the amount of units produced will affect the allocation of fixed overhead costs to each unit, which in turn affects the cost of goods sold. Additionally, the quantity of products sold will directly impact the total revenue and cost of goods sold.

Under Absorption Costing