A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2009 · Q261 Mark

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?

Aoverheads will include both fixed and variable overhead costs

Boverheads will include direct costs only

Coverheads will include fixed overhead costs only

Doverheads will include variable overhead costs only

✓ Correct answer

A: overheads will include both fixed and variable overhead costs

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2009 Paper 1 Variant 2, question 26.

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