Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

Which statements accurately compare the advantages of absorption costing and marginal costing?

  • Aabsorption costing: avoids the need to separate fixed costs and variable costs; marginal costing: useful when there is a limiting factor affecting production
  • Babsorption costing: is a recognised method of valuing inventory; marginal costing: ensures fixed costs are attributed to cost centres
  • Cabsorption costing: useful for determining selling price; marginal costing: is a recognised method of valuing inventory
  • Dabsorption costing: useful for short-term decision-making; marginal costing: useful for determining selling price

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