CIPS Exam L4M5 Topic 13 Question 45 Discussion

Actual exam question for CIPS's L4M5 exam

Question #: 45
Topic #: 13

[All L4M5 Questions]

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

Show Suggested Answer

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

by Arminda at Aug 08, 2023, 01:01 AM

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Truman

2 months ago

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

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Elza

14 days ago

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

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Kathryn

1 months ago

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

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Darrin

1 months ago

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

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Georgeanna

2 months ago

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

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Jeannine

5 minutes ago

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

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Major

1 days ago

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

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Carmelina

2 days ago

I agree, Option C is the correct choice.

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Fernanda

6 days ago

D) Includes an allocation of producing an additional unit

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Reid

7 days ago

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

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Albina

9 days ago

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

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Donte

13 days ago

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

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Alonso

2 months ago

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

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Michael

1 months ago

User 2

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Burma

2 months ago

User 1

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Azalee

2 months ago

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

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Hollis

2 months ago

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

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Georgene

2 months 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.

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