When absorption costing is used:
A)Production inefficiencies are immediately identified.
B)Production to absorb the cost of waste and yield factors not considered in other costing methods.
C)Both variable and fixed costs are included in unit costs.
D)The transfer of values to the income statement through inventory accounts.

Question

When absorption costing is used:
A)Production inefficiencies are immediately identified.
B)Production to absorb the cost of waste and yield factors not considered in other costing methods. 
C)Both variable and fixed costs are included in unit costs.
D)The transfer of values to the income statement through inventory accounts.

Quizplus · Accepted Answer

Absorption costing includes both variable and fixed costs in unit costs, whereas other costing methods may only include variable costs. This method also transfers values to the income statement through inventory accounts. However, it may not immediately identify production inefficiencies and does not specifically account for the cost of waste and yield factors.

When Absorption Costing Is Used