“In CVP analysis, gross margin is a less-useful concept than contribution margin.” Do you agree? Explain briefly?

Q: Which of the following is correct? The break-even point occurs when: Select one: a. total variable…

A: Break even point is the point where the production level at which the production costs equal to the…

Q: Discuss how contribution margin can be maximized when one factor limits productive capacity.

A: In this question, we are taking the example of a small medical. Factors that would most likely to…

Q: how does the contribution margin pricing method differ from ratio pricing method?

A: The question is based on the concept of pricing policy and methods. The product's price can be…

Q: Describe and apply the lower-of-cost-or-net realizable value rule.

A:

Q: In economic analysis we want to minimize the difference: (Benefits - Costs).

A: While conducting an economic analysis (cost-benefit analysis) the benefits must weigh greater than…

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: 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: What is Principle of Unequal Cost and who advocated the principle?

A: The basic principle of unequal cost can be described simply as "buying cheap and selling dear". In…

Q: Why is there a need to separate mixed cost as to variable & fixed cost?

A: Variable cost: these are the costs which vary with the units produced. These costs increase by…

Q: “Variable costs are always relevant, and fixed costs are always irrelevant.” Do you agree? Why?

A: A relevant cost refers to the cost amount which is related to a particular decision. Relevant cost…

Q: Besides the dollar cost, what other costs should you consider when comparing alternative solutions…

A: A company will incur various costs to earn revenue. The costs can be either direct or indirect costs…

Q: Explain the concepts of revenue, costs, break-even and profit with examples?

A: These concepts are related to variable costing in which we use variable cost to compute our…

Q: How can the WACC be both an average cost and a marginal cost?

A: Weighted average cost of capital is the aggregated cost of capital with respect to the weights or…

Q: What is the economic rationale for the cost approach? Under what conditions would the cost approach…

A: Answer: Economic rationale for cost approach: The cost approach means that the person who is…

Q: “Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of…

A: Indirect cost pool refers to the accumulated cost that jointly benefits two or more costs…

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: According to our authors, explain the concept of “lower-of-cost-or-market.”

A: When a company prepares its financial statement, it reports certain items in the financial statement…

Q: What is the primary disadvantage of basing the costplus pricing formula on absorption cost?

A: Definition: Cost plus-pricing approach: The pricing approach used by the companies to set the target…

Q: Why can cost benefit analysis be difficult to carry out?

A: Introduction: Cost benefit analysis can be defined as a process which is undertaken by an…

Q: How is contribution margin calculated? What about contribution margin ratio? Aren’t they the same…

A: Subtracting the selling price per unit from the variable cost per unit yields the contribution…

Q: Explain realizable value less than cost or cost greater than net realizable value?

A: Introduction:- The following formula used to calculate net realizable value as follows under:- Net…

Q: Why is an incremental analysis necessary when conducting a rate of return analysis for cost…

A: Incremental analysis considers only the relevant cash flows and it does not consider the…

Q: Why might it be misleading to show the fixed costs on a per unit basis?

A: Fixed Costs are those costs that do not change in aggregate in relation to the level of production…

Q: “We are already measuring total factor productivity. Measuring partial productivities would be of no…

A: Total factor productivity: It measures the ratio of aggregate productivity. It is computed by…

Q: How is cost-volume-profit analysis useful?

A:

Q: Which of the following is a correct definition of the margin of safety? The excess of contribution…

A: Margin of safety: Margin of safety is the point at which company makes profit. In other words Margin…

Q: Explain why sunk costs are not considered in the analysis ofinvestment alternatives.

A: A sunk cost is also known as the retrospective cost, is a cost that cannot be recovered because it…

Q: If fixed costs increase, what would be the impact on the (a) contribution margin?

A: Fixed cost means the cost which do not vary with the level of output where as variable cost will…

Q: How is cost-volume-profit analysis different from profit planning?

A: Cost Volume Profit Analysis - This is an Analysis which provides the details How it will Effect the…

Q: Which of the following is NOT considered in cost-volume-profit analysis?

A: Answer: opportunity costs.

Q: In what sense is the WACC an average cost? A marginal cost?

A: Weighted average cost of capital is the firm's cost of capital which is based on proportion of each…

Q: me major part of the The cost-benefit-trade-off problem involves identifying all the activities and…

A: A cost-benefit analysis compares the predicted or estimated costs and benefits (or opportunities)…

Q: “Variable costs and differential costs mean the same thing.” Do you agree? Explain

A: Differential cost:   The difference between the costs of two alternatives is considered as a…

Q: When comparing the lower of cost to market the appropriate market value is determined before…

A: The inventory costing approach known as the lower-of-cost-or-market (LCM) values inventory at the…

Q: hould the costs be historical (embedded)costs or new (marginal) costs?

A: Historical cost is the original cost at which an asset was purchased by corporation and used in the…