Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

Which of the statements accurately compare the advantages of absorption costing with those of marginal costing?

  • Aabsorption costing avoids the need to separate fixed costs and variable costs; marginal costing is 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 is useful for determining selling price; marginal costing is a recognised method of valuing inventory
  • Dabsorption costing is useful for short-term decision-making; marginal costing is useful for determining selling price

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