Discuss CIPS L4M5 Exam Topic 13 Question 45

Absorption costing is when the total cost per each unit of output:

AIncludes an allocation towards the activity cost of its creation

BIncludes an allocation towards indirect costs used in its creation

CIncludes an allocation for a proportion of total production costs

DIncludes an allocation of producing an additional unit

Suggested Answer: C, E

There are many macro economic factors that could influence procurement in general and commercial negotiation in particular. Below are six factors that are agreed to be fairly significant:

* Economy growth rate

* Inflation rates

* Interest rates

* Currency exchange rate

* Unemployment rate

* Protectionism

LO 2, AC 2.2

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38 comments · newest first

Armando 11 months ago

Definitely option C, it’s about total production costs!

Barbra 12 months ago

Wait, does it really include all those costs? Sounds too good to be true.

Micheal 12 months ago

I think it’s mostly about indirect costs, right?

Queen 1 year ago

Totally agree, it covers all production costs!

Johnna 1 year ago

Absorption costing includes both fixed and variable costs.

Felix 1 year ago

I thought absorption costing was more about fixed costs, so D doesn't seem to fit, but I can't recall the exact details.

Wenona 1 year ago

I'm a bit confused about the definitions, but I feel like A could be right since it talks about activity costs.

Alica 1 year ago

I remember a practice question that mentioned total production costs, which makes me lean towards C.

Annmarie 1 year ago

I think absorption costing includes indirect costs, so maybe it's B? But I'm not entirely sure.

Chantell 1 year ago

I'm a little confused by this question. There are a few different options presented, and I'm not sure which one would be the most effective. I'll need to think it through carefully and review the details before deciding on the best approach.

Vince 1 year ago

I remember a similar question where we discussed using charts to assess test progress. I think B might be correct since it reveals issues.

Altha 1 year ago

FlightControl seems like it could be the feature they're looking for, but I'm a bit confused by the wording of the question.

Martin 1 year ago

Wait, I'm a little confused. Is the independent variable the patient days or the maintenance cost? I need to re-read the question and data carefully to make sure I understand what they're asking for.

Cristina 1 year ago

Hmm, I'm not too sure about this one. I know there are a lot of different IEEE standards and I'm not super familiar with the wireless ones. I'll have to think this through carefully.

Truman 2 years ago

Well, time to put on my accountant hat. Option C is the clear winner here. Gotta love those indirect costs, am I right?

Elza 1 year ago

↳ replying to Truman

I see your point, but I still think option A is the most accurate. Allocating towards the activity cost is key in absorption costing.

Kathryn 1 year ago

↳ replying to Truman

I think option B is also important. Including an allocation towards indirect costs is crucial for accurate costing.

Darrin 2 years ago

↳ replying to Truman

I agree, option C is the best choice. Indirect costs play a big role in absorption costing.

Georgeanna 2 years ago

Haha, 'absorption costing' - sounds like something out of a science fiction movie! But in all seriousness, Option C is the way to go.

Natalie 1 year ago

↳ replying to Georgeanna

I'm not sure, but I think Option D might be the right choice for absorption costing.

Jeannine 1 year ago

↳ replying to Georgeanna

Actually, I believe Option A is the best answer, as it includes activity costs.

Major 1 year ago

↳ replying to Georgeanna

I think Option B makes more sense, as indirect costs are important in production.

Carmelina 1 year ago

↳ replying to Georgeanna

I agree, Option C is the correct choice.

Fernanda 1 year ago

↳ replying to Georgeanna

D) Includes an allocation of producing an additional unit

Reid 1 year ago

↳ replying to Georgeanna

C) Includes an allocation for a proportion of total production costs

Albina 1 year ago

↳ replying to Georgeanna

B) Includes an allocation towards indirect costs used in its creation

Donte 1 year ago

↳ replying to Georgeanna

A) Includes an allocation towards the activity cost of its creation

Alonso 2 years ago

I agree with Georgene. Absorption costing is about including all costs associated with production, not just the direct costs.

Michael 1 year ago

↳ replying to Alonso

User 2

Burma 2 years ago

↳ replying to Alonso

User 1

Azalee 2 years ago

I'm not sure, but I think it might be B, as indirect costs are also included in absorption costing.

Hollis 2 years ago

I agree with Clare, because absorption costing includes a proportion of total production costs.

Georgene 2 years ago

Option C seems to be the correct answer. Absorption costing includes an allocation of all production costs, both direct and indirect, to each unit of output.

Willis 1 year ago

↳ replying to Georgene

Exactly, it provides a more accurate reflection of the total cost of production.

Lynelle 1 year ago

↳ replying to Georgene

So, absorption costing helps in spreading out all production costs evenly across units.

Cordelia 2 years ago

↳ replying to Georgene

Yes, that's right. It includes both direct and indirect costs in the total cost per unit.

Noah 2 years ago

↳ replying to Georgene

I think option C is correct. Absorption costing includes all production costs in each unit.

Clare 2 years ago

I think the answer is C.

CIPS L4M5 Exam - Topic 13 Question 45 Discussion