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 determine the cost of goods sold, as it includes both direct and indirect costs of production, such as manufacturing overhead. Therefore, the cost of goods sold is calculated by dividing the total cost of production by the number of units produced, and then multiplying the result by the number of units sold.

Under Absorption Costing