Collins Company uses cost-plus pricing and has calculated total variable manufacturing cost, total absorption manufacturing cost, and total cost for one of its products. Which of these costs would be the smallest?
A) Total variable manufacturing cost.
B) Total absorption manufacturing cost.
C) Total cost.
D) There is no difference between total absorption manufacturing cost and total cost.
E) More information is needed to correctly answer the question.

Question

Quizplus · Accepted Answer

Total variable manufacturing cost would be the smallest because it includes only the variable costs of manufacturing the product, whereas total absorption manufacturing cost also includes fixed manufacturing overhead, making it larger. Total cost would include both manufacturing and non-manufacturing costs, making it the largest.

Collins Company Uses Cost-Plus Pricing and Has Calculated Total Variable