Absorption costing is also known as.a.historical costing.b.real costing .c.marginal costing.d.real costing.
Question
Absorption costing is also known as:
- a. historical costing.
- b. real costing.
- c. marginal costing.
- d. real costing.
Solution
Absorption costing is a managerial accounting method for capturing all costs associated with manufacturing a particular product. It includes both variable costs (like direct materials and labor) and fixed costs (like factory overhead).
Regarding your question, the correct choice is not straightforward because the options presented contain repetition and inaccuracies. However, absorption costing is frequently referred to by another term: "full costing."
To clarify the terms:
- Historical costing (option a) generally refers to the recording of costs incurred in the past.
- Real costing does not refer to a standard accounting term.
- Marginal costing (option c) is actually a different costing method that focuses only on variable costs.
Since none of the provided options correctly identify absorption costing as "full costing," none fit accurately.
In conclusion, absorption costing is not accurately described by any of the provided multiple-choice options.
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