For product-costing purposes, which of the following statements is true?
A) Under the absorption or full-costing approach it is necessary to "unitize" fixed overhead costs.
B) The amount of standard fixed overhead costs for product-costing and for control purposes is the same.
C) Only standard variable overhead costs are included since these costs change in response to cost drivers.
D) Standard costing is not permissible under generally accepted accounting principles (GAAP).
E) Total fixed overhead costs are applied to production (output) as a "lump-sum" amount.

Question

Quizplus · Accepted Answer

Under the absorption or full-costing approach, fixed overhead costs are unitized or spread over the units produced, meaning that a portion of these costs is assigned to each unit. This is necessary to accurately allocate all costs to the product being produced.

For Product-Costing Purposes, Which of the Following Statements Is True