The absorption costing approach to cost-plus pricing will result in attaining the company's required rate of return only if forecasted unit sales are realized.

Question

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs in the product's cost and uses a markup to set the price. If forecasted unit sales are not achieved, the company may not generate enough revenue to cover all costs, resulting in lower profits or losses.

The Absorption Costing Approach to Cost-Plus Pricing Will Result in Attaining