The absorption approach to the computation of manufacturing cost differs from the contribution approach because the absorption approach:
A) includes variable selling and administrative costs
B) includes all selling and administrative costs
C) includes all fixed costs
D) includes fixed overhead

Question

Quizplus · Accepted Answer

The absorption approach includes all manufacturing costs, both variable and fixed, in the cost of a product. This includes fixed overhead, which is not included in the contribution approach.

The Absorption Approach to the Computation of Manufacturing Cost Differs