A-LevelAccountingTraditional costing methods9706/12 · May/June 2022 · Q241 Mark

What is a limitation of absorption costing?

AIt does not comply with accounting principles.

BIt does not take into account all costs of production.

CIt is not accepted for preparing published financial statements.

DIt is not useful for improving the organisation's performance.

✓ Correct answer

D: It is not useful for improving the organisation's performance.

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, May/June 2022 Paper 1 Variant 2, question 24.

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