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Which of the following costs are included in product or inventoriable costs in an absorption costing system? Direct material, direct labor, and:
All overhead costs are included in product or inventoriable costs in an absorption system along with direct material and labor costs.
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Many companies have made significant strides in reducing their inventories. Which of the following would be least likely to encourage managers to reduce inventory?
By using absorption costing managers have the least incentive to reduce the current amount of inventory.
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In situations when management must decide on accepting or rejecting one time only special orders, where there is sufficient idle capacity, which one of the following is not relevant to the decision?
Incremental costs are the only costs not relevant to the make or buy special order decision.
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A cost that bears an observable and known relationship to a quantifiable activity base is a:
An engineered cost bears an observable and known relationship to a quantifiable activity base.
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Costs are allocated to cost objectives in many ways and for many reason. Which of the following is a purpose of cost allocation?
Cost allocation is essential for measuring income and assets for external reporting.
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Which of the following is another name for Activity Based Costing?
When the cost driver is the number of transactions involved in a particular activity, ABC is referred to as transaction-based costing.
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