The choice of the absorption or contribution approach affects the manufacturing cost per unit because the:
A) manufacturing cost per unit is independent of the approach
B) manufacturing cost per unit is the same regardless of the approach
C) manufacturing cost per unit is higher if the absorption approach is used
D) manufacturing cost per unit is higher if the contribution approach is used

Question

Quizplus · Accepted Answer

Under the absorption approach, fixed manufacturing overhead is included in the product cost, leading to a higher manufacturing cost per unit compared to the contribution approach, which treats fixed manufacturing overhead as a period cost.

The Choice of the Absorption or Contribution Approach Affects the Manufacturing