In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevant to the short run decision is * O direct labor O variable overhead O fixed overhead that will be avoided if the part is bought from outside vendor O fixed overhead that will continue if the part is bought from outside vendor

In deciding whether to manufacture a part or buy it from an outside vendor, a cost that is irrelevant to the short run decision is * O direct labor O variable overhead O fixed overhead that will be avoided if the part is bought from outside vendor O fixed overhead that will continue if the part is bought from outside vendor

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 3MC: Which is not a step in analyzing the cost driver for manufacturing overhead? A. Identify the cost B....

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In a make-or-buy decision, a. the company must choose between expanding or dropping a product line. b. the company must choose between accepting or rejecting a special order. c. the company would consider the purchase price of the externally provided good to be relevant. d. the company would consider all fixed overhead to be irrelevant. e. None of these.
Which is not a step in analyzing the cost driver for manufacturing overhead? A. Identify the cost B. identify non-value-added costs C. analyze the effect on manufacturing overhead D. identify the correlation between the potential driver and manufacturing overhead
When deciding whether to make or buy a component part, the most relevant consideration is often: Question options: a) The sunk cost of equipment used to manufacture the part. b) The unavoidable fixed manufacturing costs. c) The average total cost of making the part. d) The variable manufacturing costs per unit.
Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwiderates to assign cost accurately.
When making outsourcing decisions, which of the following is true? The expected use of the freed capacity is irrelevant. The variable cost of producing the product in-house is relevant. The total manufacturing unit cost of making the product in-house is relevant. Avoidable fixed costs are irrelevant.
When making outsourcing decisions, which of the following is true? a. Expected use of the freed capacity is irrelevant. b. The variable cost of producing the product in-house is relevant. c. The total manufacturing unit cost of making the product in-house is relevant. d. Avoidable fixed costs are irrelevant.
The cost of minor materials, such as nuts, glue, tape, low value chemicals, etc. used in the manufacturing process, are treated as: A. Direct materials, because these can be traced easily to specific products B. Indirect materials, because these cannot be directly traced to any specific products C. Direct materials, because it is traditionally accepted costing practice D. Indirect materials, because it may not be worth the time it would take to charge to the specific product direct
When the units produced is greater than the units sold, A. some variable manufacturing overhead costs are deferred until a future period when using absorption costing.B. variable and fixed manufacturing overhead costs are deferred until a future period when using absorption costing. C. some fixed manufacturing overhead costs are deferred until a future period when using absorption costing.D. variable and fixed manufacturing overhead costs are deferred until a future period when using variable costing.
Comment on the problems that may follow from a decision to increase the overhead absorption rate in conditions when cost –plus pricing is used and overhead is currently underabsorbed. giving a bold illustration.
The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is: Multiple Choice the variable manufacturing cost of the component. the total manufacturing cost of the component. the fixed manufacturing cost of the component. zero.
If the Activity-Based Costing (ABC) method's main intention is to find a possibility to cut the Overhead and indirect costs from the cost of production, is the blow statement correct? Please explain thoroughly with examples and restate the correct statement if it is false. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a lower unit cost resulting for the high volume products. When a company implements activity-based costing, manufacturing overhead cost is often shifted from high volume products to low volume products, with a higher unit cost resulting for the low volume products. Does the shift from low-volume to high-volume or vice versa affect the product cost?
Fixed manufacturing overhead is included in product costs under: absorptions costing variable costing optionA yes yes option B no no option C no yes option D yes no Option A Option B Option C Option D