Demonstrate why expressing fixed costs on a per unit of activity basis is misleading and may result in faulty decisions.

Q: explain why GAAP requires full absorption costing (instead of variable costing) if absorption…

A: Introduction:- i)Absorption costing:- Under the absorption costing, The following costs included in…

Q: ‘Costs maybe classified in a different type of behavioural costs such as variable and fixed costs…

A: solution : concept : variable costs               variable costs are those costs which varies along…

Q: Controllability has little to do with whether a cost is fixed or variable.  Select one: True False

A: Fixed cost is the cost that is related to the production of a good or services. It is the amount…

Q: Which of the three methods for allocating costs of products can lead to significant product cost…

A: Three methods for allocating cost of product is: 1) Single Plant wide factory overhead rate 2)…

Q: Is corrective action always necessary when actual costs are higher than standard costs

A: A company which manufactures products and goods keeps a sharp eye on its costs. When the actual cost…

Q: Why do managers consider Direct Coasts to be more accurate than Indirect  Costs?  How do managers…

A: Direct costs are the costs which are directly identifiable in the manufacturing process.  Indirect…

Q: If the organization operates at an activity level outside the relevant range, any cost predictions…

A: Answer:-  Relevant range meaning:- The term "relevant range" describes a particular activity level…

Q: The advantages of standard costing exceeds its disadvantages. True or false? Explain further

A: Standard Costing The primary purpose of implementing the cost accounting system to any organisation…

Q: Marginal costing can provide useful information for decision-making. However, there are limitations…

A: There are various limitations of marginal costing few of them are stated below.

Q: Ibra Company is considering the following alternatives: Alternative A Alternative B Revenues OMR…

A: We know that, Incremental profit = incremental sales - incremental total cost Total cost = total…

Q: Any cost that is avoidable is relevant for decision purposes. O A. True O B. False

A: Relevant costs are those costs that are affected by the specific management decision being…

Q: In a replacement analysis, why are the previous costs irrelevant?

A: Replacement Analysis is a capital budgeting method that determines whether existing assets need to…

Q: he following statements are incorrect, except a. Cost is the same with expense. b. All costs…

A: Cost accounting refer to the outflow of money for the purpose of acquiring assets, producing goods…

Q: Allocating common costs to individual segments does not make the allocated amount avoidable in the…

A: Allocating common costs to individual segments does not make the allocated amount avoidable in the…

Q: Why can full cost accounting lead to wrong management decisions?

A: Full cost accounting says that total costs of the product either it is fixed costs or it is variable…

Q: activity-based costing systems have a tendency to distort product costs. True or False?

A: The overhead is applied to the production on the basis of predetermined overhead rate. The…

Q: As a result of cost distortion, some products will be overcosted while other products will be…

A: Solution: Cost distortions occurs when the overhead costs are not properly allocated,  when the…

Q: A possible disadvantage of the ABC method is: (a) It does not allocate costs to the way production…

A: Definition:   Activity-based method (ABC): The costing method which allocates overheads to the…

Q: One disadvantage of activity-based costing is that it cannot be used for external reporting. This is…

A: Introduction Activity based Costing (ABC) is a method of assignment of overhead costs to the…

Q: Cost allocation is arbitrary, so there is nothing gained by it. We should report only the costs that…

A: Cost allocation refers to the process of distributing the single cost among various companies,…

Q: In a drop or continue decision, only the variable costs identified with a product are relevant in a…

A: The given statement is true.

Q: Costs maybe classified in a different type of behavioural costs such as variable and fixed costs…

A: From the cost behaviour perspective, there are two types of costs. One is fixed costs and other is…

Q: How cost accounting is useful where financial accounting could not be answered. Give any exampleto…

A: Accounting is primarily concerned with identifying, recording, measuring, summarizing transactions…

Q: Discuss the advantages and disadvantages of using a cost planning and control system based on earned…

A: A method for gauging project performance and advancement in terms of cost and schedule is earned…

Q: 6) Explain the difference between an inventoriable (Product) cost and a period cost. What potential…

A: Financial statements are statements which states the business activities performed by the company .…

Q: Explain why all costs are controllable by someone at some time but in the short run some costs may…

A: Cost accounting: The process of identifying, calculating and recording the cost related to the…

Q: True or false A cost center manager does not have the ability to produce revenue.

A: Cost centre manager involves in the work of cost related to the product he has not an ability to…

Q: What is the definition of cost?

A: In the business, costs are the important measures to determine the value of elements being purchased…

Q: What is the benefit of identifying avoidable and unavoidable cost in decision making process?

A: Avoidable costs: Avoidable Costs, as the name suggests, are the costs that can be avoided of the…

Q: What are: Relevant / irrelevant / Differential Costs Relevant / irrelevant / Differential Revenues…

A: Relevant / Irrelevant / Differential Costs: Relevant Costs are the cost which are relevant in…

Q: One cost that is irrelevant in decision making is a sunk cost Group of answer choices True False

A: Sunk costs are those costs that are already incurred and it is irrelevant for the decision-making as…

Q: avoidable and unavoidable cost?

A: Costs are the amount incurred for the different purposes of the business. It is defined in monetary…

Q: Cost Accounting don’t disclosure the information? True Flase

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: 1. Why are indirect costs not directly traced to cost objects in the same way as direct costs? 2.…

A: Costing is the process of determining and calculating the expenses incurred in producing goods or…

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.