Which of the following statements is true regarding absorption costing?
A)It is not the traditional costing approach.
B)It is not permitted to be used for financial reporting.
C)It is not permitted to be used for tax reporting.
D)It assigns all manufacturing costs to products.
E)It requires only variable costs to be treated as product costs.

Question

Quizplus · Accepted Answer

Absorption costing assigns all manufacturing costs, both fixed and variable, to products. It is a traditional costing approach and is allowed for both financial and tax reporting purposes. Option E is incorrect as absorption costing treats both variable and fixed costs as product costs.

Which of the Following Statements Is True Regarding Absorption Costing