Absorption costing is required to be used for
A)federal income tax reports.
B)external financial reports, but not income taxes.
C)neither external financial reports nor income tax reports.
D)both external financial reports and income tax reports.

Question

Quizplus · Accepted Answer

Absorption costing is required to be used for both external financial reports and income tax reports. This is because absorption costing includes all costs, including both fixed and variable costs, in the calculation of the cost of goods sold. This provides a more accurate representation of the true cost of production and is therefore required by accounting standards for both external financial reporting and income tax reporting.

Absorption Costing Is Required to Be Used for