CAF-5 · Chapter 9 · Question 5 of 10
Which of the following components are included in the valuation of closing inventory under absorption costing?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Prime cost, variable production overheads, and fixed production overheads.
Explanation
Absorption costing charges all production costs to the product. This includes direct materials and direct labour (Prime Cost), variable production overheads, and a fair share of fixed production overheads.
More Marginal Costing and Absorption Costing MCQs
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- Q1What is the fundamental difference between marginal costing and absorption costing?