What is the danger in allocating common fixed costs among products or other segments of an organization?

Q: Which of the following is NOT a reason for companies to assign costs to products or services?

A: We know that objective of every business is to attain profitability  Now, Profit for business is =…

Q: Why are support department costs difficult to apply to products?

A: Given: The difficulty in applying the support department costs on products.

Q: “Sunk costs are considered by a manufacturer in decision making”. Do you agree? Explain.

A: "Sunk costs are considered by a manufacturer in decision making”. I do not agree with this…

Q: Managers often assume a strictly linear relationship between cost and the level of activity.How can…

A: The managers often assume the strictly linear relationship between the cost and the level of…

Q: How do managers plan for variable overhead costs?

A: Variable Cost: The cost which fluctuates on the basis of the output level produced. The variable…

Q: How should a company decide on the number of cost pools it should use to allocate costs to…

A: Costing: Costing is a technique used in cost accounting to determine the cost of a product. With the…

Q: Indirect costs occur when? A. Resources are shared by more than one product or service. B. Costs…

A: All those expenses that are incurred in common for different projects, products, or business…

Q: Why is it that product costs are distinguished from period costs?

A: Product cost is the cost that is incurred to manufacture the product. The product cost will include…

Q: Management Accounting) If fixed production costs are not allocated to manufactured products, this…

A: SOLUTION FIXED COST INCLUDES THE RENT OR MORTGAGE PAYMENT YOU PAY FOR YOUR FACTORY AND OFFICE…

Q: Why is the form of activity-based costing unacceptable for external financial reports?

A:

Q: What are the challenges of using the incremental cost allocation method when allocating common costs…

A: Cost Allocation Method:   The cost allocation method is the method by which the costs to be assigned…

Q: How do managers decide whether a cost is avariable or a fixed cost?

A: Cost refers to the amount of money incurred for acquiring a product or manufacturing a product. Cost…

Q: What are the limitations of joint product and departmental cost allocation?

A: The limitations of joint product and departmental cost allocation.

Q: What makes POS systems different from revenue cycles of manufacturing firms?

A: POS System:   It is a system implemented in rattail sectors where the sale transaction taking place…

Q: Demonstrate why expressing fixed costs on a per unit of activity basis is misleading and may result…

A: Companies can have two types of costs, fixed costs and variable costs, which together result in…

Q: What are the arguments in favor of treating fixed manufacturing overhead costs as product costs?

A: Following are the arguments in treating fixed manufacturing overhead costs as product costs: For…

Q: How can variable costing be used in service companies?

A: Variable Costing: The variable costing is the method of costing in which only the variable…

Q: TRUE OR FALSE The general principle in determining the number of cost pools is that a separate cost…

A: Solution: The general principle in determining the number of cost pools is that a separate cost pool…

Q: re the difference between traditional product costs and activity-based product

A: Traditional product costs: The traditional method of allocating product costs is to allocate the…

Q: how to solve plantwide overhead rate versus departmental rates, effects on pricing decisions?

A: Since there are multiple sub parts in the question, calculation will be given for first three sub…

Q: 1-Why is it important to distinguish cost incurrence from locked-in cost? 2- How do companies…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which two categories of costs influence the choice of how manystorage facilities a firm might have…

A: The management of the company makes a decision that benefits the company most. when an investment or…

Q: What kinds of challenges occurs in the Cost Control and Cost Reduction in the Manufacturing…

A: Cost Control is different from cost reduction Cost Control focuses/emphasises on decreasing the…

Q: How do fixed costs create difficulties in costing units of product

A: Fixed costs are the costs that do not tend to fluctuate with change in production levels in the…

Q: Do the engineering decisions account for the majority of product costs?

A: Yes, engineering decisions will account for the majority of the cost of the product. The main task…

Q: "Simplification of all costs into only fixed and variable costs distorts the actual cost behavior…

A: Introduction:- There are four basic cost behavior patterns as follows:- fixed costs variable costs…

Q: Why do managers assign different costs to thesame cost objects?

A: A cost object can be defined as something to which the management feels the need to separately…

Q: What is cost stickiness? Why do managers need to be aware of cost stickiness?

A:

Q: Explain why service companies use different activity bases than manufacturing companies to classify…

A: Service companies are those companies which provide services to their clients  such as…

Q: Why do product-costing systems based on a single, volume-based cost driver tend to overcost…

A:

Q: What is the danger in allocating common fixed costs among product lines or other segmentsof an…

A: Fixed cost: It can be defined as the cost that does not vary with an increase or decrease in the…

Q: Operating leverage refers to the extent to which an organization's cost structure is made up of:…

A: Operating leverage is a ratio of how of change in sales effect the change in operating income. It…

Q: What are the pros/cons of product costing allocation methods and how they influence distortion of…

A: Product costing allocation methods are used to assign or allocate a cost to manufactured/produced…

Q: Why is the form of activity-based costing described in this chapter unacceptable for external…

A:

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.