CIPS Exam L4M5 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?

AFixed cost allocated to products on the basis of the cost of activities used in producing them

BVariable costs are not taken into product final costs

CUsing marginal cost of producing addition units

DLimited understanding of true costs incurred

Show Suggested Answer

Suggested Answer: A

LO 2, AC 2.1

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

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Ria

1 months ago

Absorption costing? More like absorbing my tears after this exam.

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Dierdre

10 days ago

D) Limited understanding of true costs incurred

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Antione

16 days ago

B) Variable costs are not taken into product final costs

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Frederick

18 days ago

A) Fixed cost allocated to products on the basis of the cost of activities used in producing them

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Martina

1 months ago

I heard the exam board is using absorption costing to calculate the pass mark. Good luck, everyone!

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Erick

5 days ago

I hope they consider all the costs involved in the exam.

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Carey

1 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 days ago

D) Limited understanding of true costs incurred

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Flo

12 days ago

B) Variable costs are not taken into product final costs

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Tayna

13 days ago

A) Fixed cost allocated to products on the basis of the cost of activities used in producing them

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Donte

2 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

1 months ago

It's important to consider all costs to get a true picture of profitability.

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Shawnta

1 months ago

Yeah, ignoring variable costs can lead to inaccurate product pricing.

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Ena

1 months ago

I agree, B is a big disadvantage of absorption costing.

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Kattie

2 months ago

C? Really? That doesn't sound like a disadvantage of absorption costing at all.

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Lorenza

15 days ago

C? Really? That doesn't sound like a disadvantage of absorption costing at all.

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Mary

19 days ago

D) Limited understanding of true costs incurred

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Melodie

1 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

2 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

2 months ago

I agree with Charlene, D) Limited understanding of true costs incurred can be a problem.

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Paris

2 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

27 days 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

1 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

1 months ago

It's true, absorption costing method can be misleading in terms of actual costs incurred.

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Reena

2 months ago

I agree, D is the correct answer. Absorption costing can lead to limited understanding of true costs.

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Charlene

2 months ago

I think the disadvantage is D) Limited understanding of true costs incurred.

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