1. Which of the following is a disadvantage of the Variable Costing method? A. The data available does not easily relate to CVP[Cost-volume- profit] applications. B. The data is not applicable to short-term decision-making situations. C. Much time and effort must be expended to allocate fixed costs to various segments. D. It cannot be used for external reporting purposes. E. All of the above are disadvantages of variable costing.

1. Which of the following is a disadvantage of the Variable Costing method? A. The data available does not easily relate to CVP[Cost-volume- profit] applications. B. The data is not applicable to short-term decision-making situations. C. Much time and effort must be expended to allocate fixed costs to various segments. D. It cannot be used for external reporting purposes. E. All of the above are disadvantages of variable costing.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter8: Tactical Decision-making And Relevant Analysis

Section: Chapter Questions

Problem 14MCQ

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Which of the following is not a potential advantage of variable costing relative absorptioncosting?a. Net income computed under variable costing is unaffected by changes productionlevels.b. It is easier to understand the impact of fixed and variable costs on computation of netincome when variable costing is used.c. The use of variable costing is consistent with cost-volume-profit analysis.d. Net income computed under variable costing is not closely tied to changes in sales level.
A basic belief of variable costing is that period costs should be currently expensed. What is thebasic rationale behind this procedure?a. Period costs are uncontrollable and should not be charged to a specific product.b. Period costs are generally immaterial in amount and the cost of assigning the amountsto specific products would outweigh the benefits.c. Allocation of period costs is arbitrary at best and could lead in erroneous decisions bymanagement.d. Period costs will occur whether or not production occurs and so it is improper toallocate these costs to production and defer a current cost of doing business.
Wrong allocation of common costs lead to A. Inaccurate estimation of cost of products or services B. Under utilization of capacity C. Lower profit margin D. All of the above are correct
If the organization operates at an activity level outside the relevant range, any cost predictions based on data from the relevant range may not be very accurate. True or False?
Disadvantages of activity-based costing include which of the following? a. It is not acceptable under GAAP for external reporting. b. It can be costly to implement. c. It can be used in activity-based management. d. Both a. and b.
Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.
One disadvantage of activity-based costing is that it cannot be used for external reporting. This is because of the :following except It does not follow GAAP a O It may lead to accurate cost calculation b O It is very detailed compared to external reports needs .c O It might be subjective d O
Complete the following statements with one of the terms listed here: You may use a term more than once and some terms may not be used at all. Differential Costs Irrelevant Costs Controllable Costs Marginal Costs Fixed Costs Average Cost Uncontrollable Costs Sunk Costs Variable Costs 1. For decision-making purposes, costs that do not differ between alternatives are 2. Costs that have already been incurred are called 3. Managers cannot influence .........in the short run. 4. Total stay constant over a wide range of production volumes. 5. The. action. is the difference in cost between two alternative courses of 6. The product's is the cost of making one more unit. Total costs decrease when production volume decreases. 7. A product's and ............ not the product's should be used to forecast total costs at different production volumes.
Which of the following statements is false? (You may select more than one answer.)a. Under some circumstances, a sunk cost may be a relevant cost.b. Future costs that do not differ between alternatives are irrelevant.c. The same cost may be relevant or irrelevant depending on the decision context.d. Only variable costs are relevant costs. Fixed costs cannot be relevant costs.
Which of the following is false regarding activity-based costing (ABC)? a. Companies that have a high potential for cost distortions are more likely to benefit from ABC b. Opportunities for continuous improvement are rarely revealed by using ABC. c. The cost of implementing ABC may outweigh the benefits d. Increased accuracy with budgeting resources is often realized
Which of the following is not a potential advantage of variable costing relative to absorption costing? Net income calculated under variable costing is not closely tied to changes in sales levels. Net income calculated under variable costing is unaffected by changes in production levels. It is easier to understand the impact of fixed and variable costs on the computation of net income when variable costing is used. The use of variable costing is consistent with cost-volume-profit analysis
The following statements are incorrect, excepta. Cost is the same with expense.b. All costs require at least an outlay of resources.c. Different cost concepts and classifications are used for different purposed. none of the abovee. answer not given