In a manufacturing company using absorption costing, the fixed costs associated with idle production capacity are commonly included as part of the product cost.

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Quizplus · Accepted Answer

This statement is true. In absorption costing, all fixed costs, including the cost of idle production capacity, are included in the product cost. This means that even if a company is not using its full production capacity, the fixed costs associated with that unused capacity will still be allocated to the products being produced. This is in contrast to variable costing, where fixed costs are treated as period expenses and are not allocated to the products being produced.

In a Manufacturing Company Using Absorption Costing, the Fixed Costs