The markup over cost under the absorption costing approach would increase if selling and administrative expenses increase, holding everything else constant.

Question

Quizplus · Accepted Answer

Under absorption costing, selling and administrative expenses are not considered direct product costs and are instead treated as period expenses. As a result, an increase in these expenses would not impact the variable or fixed manufacturing costs per unit but would increase the total period expenses. This increase in total period expenses would then be spread out over the entire production volume, resulting in a higher markup over cost for each unit.

The Markup Over Cost Under the Absorption Costing Approach Would