Day: January 2, 2021

A business uses job costing to calculate the cost of vehicle repair jobs. 

Overheads are allocated on an absorption costing basis.

What is the effect of this method of allocation?

Select ONE answer:

1. overheads will include both fixed and variable overhead costs
2. overheads will include direct costs only
3. overheads will include fixed overhead costs only
4. overheads will include variable overhead costs only

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct
2. Not correct
3. Not correct
4. Not correct

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