Absorption costing:
A)is complete pricing in that it takes into consideration all manufacturing and overhead costs.
B)guarantees the manufacturer a desired profit margin.
C)does not encourage a manufacturer to operate efficiently.
D)clouds the true relationship of price,volume,and costs.

Question

Quizplus · Accepted Answer

Absorption costing can cloud the true relationship between price, volume, and costs by including fixed manufacturing and overhead costs in the cost of production. This can make it difficult for managers to assess the true cost of producing individual units and may lead to inefficient operations.

Absorption Costing