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      Question

      Which cost method would capitalise fixed manufacturing

      overheads per unit?
      A Marginal costing (variable costing) --- does not capitalise fixed OH Correct Answer Incorrect Answer
      B Absorption costing --- includes fixed overheads in product cost Correct Answer Incorrect Answer
      C Direct costing only Correct Answer Incorrect Answer
      D Standard costing never includes OH Correct Answer Incorrect Answer

      Solution

      Absorption costing allocates a portion of fixed manufacturing overheads to each unit of product, thereby capitalizing them into inventory cost.

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