Question

Which of the following statements is false regarding absorption costing? Multiple Choice It assigns all manufacturing...

Which of the following statements is false regarding absorption costing?

Multiple Choice

  • It assigns all manufacturing costs, both fixed and variable, to units of product.

  • It is typically used for external financial reporting.

  • It relies on a predetermined overhead rate to apply direct material cost to units of product.

  • It treats all nonmanufacturing costs as period costs.

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Answer #2

Answer : Correct Option is It relies on a predetermined overhead rate to apply direct material cost to units of product.

Reason :

Absorption Costing assigns all manufacturing costs, both fixed and variable, to units of product.Under GAAp it is used for external financial reporting.and It treats all nonmanufacturing costs as period costs..Therefore only false staemet remaining is that It relies on a predetermined overhead rate to apply direct material cost to units of product.

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