Which one of the following statements is correct? The term 'absorption costing' describes:
A)The accumulation of direct costs and production overheads which is applied in the costing of work-in-progress and finished goods inventory.
B)The process of accumulating those direct costs that can be identified with a particular batch of products.
C)The calculations involved in working out the costs attributable to a particular cost centre.
D)The accumulation of costs for decision-making purposes.

Question

Quizplus · Accepted Answer

Absorption costing involves the accumulation of direct costs and production overheads which are applied in the costing of work-in-progress and finished goods inventory. It is a method of costing in which all costs, both variable and fixed, are allocated to products, resulting in the absorption of overheads into the cost of goods sold.

Which One of the Following Statements Is Correct? the Term