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CIPS L4M5 Exam - Topic 6 Question 75 Discussion

Actual exam question for CIPS's L4M5 exam
Question #: 75
Topic #: 6
[All L4M5 Questions]

Which of the following is a disadvantage of absorption costing method?

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Suggested Answer: A

LO 2, AC 2.1


by Veronika at Nov 18, 2024, 09:40 PM

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Simona
3 months ago
C is about marginal costs, not really a disadvantage in my opinion.
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Chantay
3 months ago
Wait, are we sure B is a disadvantage? Seems odd.
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Annabelle
3 months ago
Totally agree with D, it really skews the cost picture.
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Eura
4 months ago
I think A is misleading, fixed costs are important too.
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Albina
4 months ago
D is definitely a disadvantage.
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Kizzy
4 months ago
I’m leaning towards option D as well, but I’m a bit confused about how marginal costs fit in. Is that related to option C?
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Josefa
4 months ago
I feel like I've seen a similar question before, and I think it was about how absorption costing doesn't really reflect variable costs properly. Could that be option B?
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Winfred
4 months ago
I'm not entirely sure, but I remember something about fixed costs being allocated differently in absorption costing. Maybe option A?
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Dana
5 months ago
I think option D might be the right answer because absorption costing can obscure the actual costs involved.
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Nobuko
5 months ago
The answer is D - limited understanding of true costs incurred. Absorption costing doesn't provide the full picture since it includes fixed costs, unlike variable costing.
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Tyisha
5 months ago
I'm a bit confused on this one. Is it something to do with how fixed costs are allocated? I'll need to review my notes to be sure.
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Carli
5 months ago
Okay, I've got this. The disadvantage is that variable costs are not taken into the final product costs under absorption costing. That's the key difference from variable costing.
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Clay
5 months ago
Hmm, this one seems tricky. I'll need to think through the differences between absorption and variable costing to figure out the key disadvantage of absorption costing.
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Ria
9 months ago
Absorption costing? More like absorbing my tears after this exam.
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Dierdre
9 months ago
D) Limited understanding of true costs incurred
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Antione
9 months ago
B) Variable costs are not taken into product final costs
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Frederick
9 months ago
A) Fixed cost allocated to products on the basis of the cost of activities used in producing them
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Martina
9 months ago
I heard the exam board is using absorption costing to calculate the pass mark. Good luck, everyone!
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Moira
8 months ago
Let's just focus on studying and doing our best.
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Irene
8 months ago
I heard absorption costing can lead to limited understanding of true costs.
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Erick
8 months ago
I hope they consider all the costs involved in the exam.
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Carey
10 months ago
A? Sounds more like an advantage to me. Allocating fixed costs based on activities is a key feature of absorption costing.
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Ronny
9 months ago
D) Limited understanding of true costs incurred
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Flo
9 months ago
B) Variable costs are not taken into product final costs
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Tayna
9 months ago
A) Fixed cost allocated to products on the basis of the cost of activities used in producing them
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Donte
10 months ago
Hmm, I'm going with B. Ignoring variable costs in the final product price is a major flaw of absorption costing.
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Shaun
9 months ago
It's important to consider all costs to get a true picture of profitability.
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Shawnta
9 months ago
Yeah, ignoring variable costs can lead to inaccurate product pricing.
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Ena
10 months ago
I agree, B is a big disadvantage of absorption costing.
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Kattie
10 months ago
C? Really? That doesn't sound like a disadvantage of absorption costing at all.
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Lorenza
9 months ago
C? Really? That doesn't sound like a disadvantage of absorption costing at all.
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Mary
9 months ago
D) Limited understanding of true costs incurred
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Melodie
10 months ago
A) Fixed cost allocated to products on the basis of the cost of activities used in producing them
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Tamesha
10 months ago
But what about A) Fixed cost allocated to products on the basis of the cost of activities used in producing them? That can also be a disadvantage.
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Rebbecca
10 months ago
I agree with Charlene, D) Limited understanding of true costs incurred can be a problem.
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Paris
11 months ago
D seems like the best answer. Absorption costing doesn't provide a full understanding of the true costs involved in production.
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Eladia
9 months ago
Yes, D is the disadvantage of absorption costing. It may not provide a comprehensive view of the true costs.
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Veda
10 months ago
I think D is the most accurate choice. Absorption costing may not give a complete picture of all costs involved.
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Letha
10 months ago
It's true, absorption costing method can be misleading in terms of actual costs incurred.
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Reena
10 months ago
I agree, D is the correct answer. Absorption costing can lead to limited understanding of true costs.
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Charlene
11 months ago
I think the disadvantage is D) Limited understanding of true costs incurred.
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