The correct answer is D. absorption.
Absorption costing is a method of accounting that assigns all manufacturing costs, both variable and fixed, to the cost of goods sold. This means that the cost of goods sold includes the cost of direct materials, direct labor, and overhead.
Overhead is a cost that is incurred in the manufacturing process but cannot be directly traced to a specific product. Examples of overhead costs include plant depreciation, plant insurance, and plant utilities.
Absorption costing is the most common method of accounting for manufacturing costs. It is required by generally accepted accounting principles (GAAP) for external financial reporting.
Allocation is the process of assigning costs to cost objects. A cost object is anything for which a separate measure of cost is desired. Examples of cost objects include products, services, departments, and projects.
Appropriation is the process of setting aside funds for a specific purpose. For example, a company might appropriate \$100,000 for research and development in the next fiscal year.
Apportionment is the process of dividing costs among two or more cost objects. For example, a company might apportion the cost of its plant manager’s salary among the company’s products based on the amount of sales each product generates.