Does having a positive Contribution Margin always indicate that it is better to continue operations for a certain product producing losses rather than discontinuing that particular product or is this a case to case basis
Q: Fixed costs are distributed, what is the profitability of the remaining services if the company…
A: Introduction:- Fixed costs are cannot be avoided. Fixed costs are distributed remaining…
Q: “If a product is generating a loss, then it should be discontinued.” Do you agree? Explain.
A: A product should not be discontinued simply because it is generating loss because there are many…
Q: Which of the following is not a consideration when a manager is deciding to discontinue a product or…
A: The management can take decision to discontinue the product or product line in case, its leading to…
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A: Variable costing is a method in which only variable cost is considered in product cost. Absorption…
Q: Is corrective action always necessary when actual costs are higher than standard costs
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Q: A downside to absorption casting is: A. not including fixed manufacturing overhead in the cost of…
A: Absorption costing demonstrates that all the expenses related to manufacturing a product are…
Q: Which of the following best describes an "opportunity cost"? Expected future costs that differ…
A: Introduction: Opportunity cost: Cost for the opportunity lost called opportunity cost.
Q: A by-product is best described as * a. A product that s produced from materials that would…
A: By product is the product that is manufactured with the primary product but later on separated from…
Q: With respect to total fixed costs, which of the following statements is true? a They will…
A: Cost refers to the expenditure incurred by an individual or entity in process of creation of goods…
Q: In a make versus buy decision which of the following factors is not relevant? fixed production…
A: Make or buy decision: Every company wants to maximize its net income. The best method to increase…
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A: Target costing is an costing technique in which it was the difference between targeted sales minus…
Q: State and explain whether the following statements are valid or not valid: A. Target costing…
A: Target costing is a costing management method where it is the difference between targeted sales…
Q: Which of the following is NOT a problem associated with standard cost accounting? a. Standard…
A:
Q: Which of the following statements best describes a by-product? Multiple Choice A product created…
A: A by-product is comparably lesser in terms of the total amount and is derived incidentally from the…
Q: Prime indicators of problems with a conventional costing system include company profits being eroded…
A: Product cost refers to the cost or expense which is incurred for creating the product and this cost…
Q: Which of the following decreases the non-value added time of producing a product and in turn…
A: Subassemblies service:It is a service offered by the manufacturer who do not have adequate time and…
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: Advocates of variable costing argue that * a. fixed production costs should be added to…
A: The fixed costs are those costs which are constant on total basis and per unit of cost decreases as…
Q: ?Which of the following statements is false Activity-based costing typically provides less…
A: In order to solve in this question, we need to analyse the given statement one-by-one.
Q: Managers often assume a strictly linear relationship between cost and volume. How can thispractice…
A: Cost: Cost can be defined as the cash and cash equivalent which is incurred against the products…
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: Is there any way to show high net operating income without increasing sales under the absorption…
A: A method of costing that involves consideration of all the manufacturing costs for calculation of…
Q: How does Lean Production reduce or eliminate the difference in reported net operating income between…
A: Absorption Costing: Absorption costing is a method for calculating the full cost or total cost of a…
Q: Which of the following statements is CORRECT with respect to fixed costs per unit? Select one: A.…
A: Fixed costs are those costs which do not change with change in level of activity. For example,…
Q: d in the cost of the product b) that it is not really useful for managerial decisions c) that it…
A: A cost accounting system is a system of accounting that is helpful for the internal management to…
Q: plain how the cost per equivalent unit might be misleading to managers, particularly when a…
A: The term "equivalent units of production" refers to the work-in-process inventory at the end of the…
Q: Which among the following is not a relevant cost for decision making? a. Cost of producing…
A: Relevant Cost refers to the incremental and avoidable cost of implementing a business decision.…
Q: What is the basic difference between variable costing and absorption costing? a. Variable costing…
A: Absorption costing: Absorption costing is also called traditional costing. This method of costing…
Q: Wrong allocation of common costs lead to A. Inaccurate estimation of cost of products or…
A: Common costs are those costs that are incurred for two or more products simultaneously. Common costs…
Q: “If a product line is generating a loss, then it should be discontinued.” Do you agree? Explain.
A:
Q: Which of the following is not true regarding continuous improvement?A. It applies to both service…
A: Continuous Improvement means business or process should be improving on regular or continuous basis.…
Q: Which of the following is a false statement about scrap and by-products? Select one: a. Both scrap…
A: Scrap is the incidental residue from material used in production activities that can be recovered…
Q: Monopolists sometimes practice price discrimination to O a. get rid of surplus product. O b,…
A: Correct answer:Option d:Increase profit
Q: Which of these efforts or actions (i.e., changing values) requires managing quality, i.e., decrease…
A: Product production comprises all operations associated to the creation of a deliverable product,…
Q: Costs that will differ between alternatives and influence the outcome of a decision are Select one:…
A: Sunk costs are expenses that have already been incurred but cannot be recovered. Sunk costs are…
Q: Which among the following is not true about traditional costing system? a. This method allocates…
A: Traditional costing is allocating the factory overhead to products based on the volume of the…
Q: Which of the following statements is not true regarding the use of variable and absorption costing…
A: Answer: Option d.
Q: Please explain the statement below thourougly with an example to illustrate the answer.
A: The statement "A product with a high gross profit could be an unprofitable product" is false as a…
Q: Statement 1: Any loss acquired when the costs related to processing, storing, and disposing of…
A: Let us first understand what are by products. By products are something that is incidental to the…
Q: Consider a situation in which a firm needs to make a decision regarding the resources to allocate…
A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…
Q: A basic tenet of variable costing is that period costs should be currently expensed. What is the…
A: Variable costs are those costs which changes with change in level of activity. Under variable…
Q: Whether any of the following sentences about abnormal spoiling is true? a. It is considered to be…
A: Spoilage refers to materials or components that have been damaged, which are beyond the capacity of…
Q: Explain why a new product costing system may be needed when line managers suggest that an apparently…
A: Product Costing System:-It is a framework that is used to determine the cost of the product for…
Q: Which of the following best describes an "opportunity cost"? Group of answer choices costs that were…
A: Opportunity cost is the loss of the benefit which is forgone to choose the best possible…
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- Which of the following is not a consideration when a manager is deciding to discontinue a product or product line? Whether the product has a positive or negative contribution margin. Determining if direct fixed costs could be avoided if the product or product line is discontinued. If discontinuing the product or product line will affect sales of remaining products. Not having any free capacity.i.“Differential Costs” are considered as relevant, where as “sunk Cost ” is considered asirrelevant for decision making purposes. Explain ii. Why opportunity cost is measured and relate with the evaluation of alternative, can it bean opportunity loss? iii. Which one either spoiled goods or defective goods are less economical for the companyand why?When deciding whether to sell as is or process a product further, managers should ignore which of the following? a. The costs of processing the product thus far b. The cost of processing further c. The revenue if the product is sold as is d. The revenue if the product is processed further
- Consider a situation in which a firm needs to make a decision regarding the resources to allocate between two products. One product makes a significantly larger contribution margin than the other. How might the contribution margin affect the decision that the firm makes? What if both contribution margins were positive or both were negative? Are there other factors when considering the contribution margin you should look for? What makes the contribution margin positive or negative?Which of the following statements is true? An avoidable fixed production cost incurred before the split-off point in a joint process is relevant in a sell or process further decision. It is profitable to continue processing joint products after the split-off point if their total revenues exceed the joint costs. Which of the following statements is true? Consistency demands that a cost that is relevant in one decision be regarded as relevant in other decisions as well. Variable costs are always relevant costs in decisions.Which of the following statements best describes a by-product? Multiple Choice A product created along with the main product whose sales value does not cover its cost of production. A product that is produced from material that would otherwise be scrap. A product that usually produces a small amount of revenue when compared to the main product's revenue. A product that has a lower unit selling price than the main unit. A product that has a selling price similar to that of the main product.
- When deciding whether to sell as is or process a product further, managers should ignore which of the following? The costs of processing the product thus far The cost of processing further The revenue if the product is sold as-is The revenue if the product is processed furtherIn a drop or continue decision, only the variable costs identified with a product are relevant in a decision-making. true or false?Which of the following would reduce net profit margin but have no effect on gross profit margin?a) Reducing the commission rate paid to salesmen.b) Negotiating a lower purchase price for raw materials.c) An increase in IT support costs for the accounting package used.d) Increasing the expected economic lives of machinery used in the production function.
- “If a product line is generating a loss, then it should be discontinued.” Do you agree? Explain.Which of the following is a correct definition of the margin of safety? The excess of contribution margin over fixed costs The excess of gross margin over target income 0 The excess of sales revenue over the breakeven point The excess of ner income over all costs (both variable and fixedExplain how absorption costing can enable a manager to increase production solely for the purpose of inflating profit but prevents a manager from doing this if variable costing is used.