Define the term avoidable cost.

Q: Define cost behaviour.

A: High-Low Method: The high-low method is the method by which the variable component and the fixed…

Q: Relevant examples of direct and indirect costs

A: Relevant examples of direct and indirect costs.

Q: Explain difference between prime costs and conversion costs.

A: Prime cost: It is the cost which is incurred for manufacturing a product. It includes direct…

Q: Define the following terms: (a) cost behavior and (b) relevant range.

A: Cost behavior and relevant range are terms under cost accounting. Cost behavior studies the pattern…

Q: Define restructuing costs.

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Explain the difference between service cost and prior service cost.

A: Service cost: The present value of the investment made by the beneficiary and the employer in the…

Q: Define unavoidable fixed costs.

A: Unavoidable fixed costs are fixed costs which cannot be avoided by discontinuing a product line or…

Q: Explain the term internal failure costs.

A: Internal failure costs: Internal failure costs include additional production-related costs that are…

Q: What is a prior service cost?

A: Prior service cost is one of the component of pension expense. It means present value of benefits or…

Q: Define relevant cost.

A: Relevant cost is a cost which can be changed with change in selection of a alternative decision.…

Q: Define cost drivers.

A:

Q: relevant and irrelevant cost

A: Relevant and irrelevant costs are categories of costs based on their effect on decision making.

Q: define direct material costs?

A: Cost: Cost refers to the expenses incurred by the business to earn revenue from sales, in other…

Q: How does an engineered cost differ from a discretionary cost?

A:

Q: Examples of varaible cost

A: Variable costs are those costs which changes along with change in level of activity. As production…

Q: Define the term total costs.

A: Costs: Costs refer to the expenses incurred by the business in the procurement of the materials,…

Q: What is the purpose of using standard costs?

A:

Q: Why there is a need to identify the standard co

A: Standard Cost A standard cost is an estimated expense that normally occurs during the production of…

Q: what is inventoriable costs?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Distinguish between inventoriable costs and period costs.

A: Characterizations of expenses. Inventoriable expenses is characterised as prices that become a part…

Q: Explain the difference between a controllable and a noncontrollable cost.

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Explain the major reasons for allocating costs.

A: The entity allocates its cost by using a different measure. The cost that is allocated is common and…

Q: Define direct costs and indirect costs?

A: Direct cost: Direct cost is the cost assigned to the cost object which is directly related to that…

Q: Explain why unit costs must often be interpreted with caution?

A: Unit cost: Unit cost refers to the average cost per unit which is computed when the total cost of…

Q: Define the term classification of costs.

A: Classification of cost is the process of grouping of costs according to same characteristic. So,…

Q: Why is it important to establish appropriate cost pools?

A: Activity cost pools are used in activity based costing which attempts to absorb overheads in a more…

Q: What does indirect cost includes?

A: Indirect costs: The costs, which do not relate directly with the manufacturing of products, are…

Q: Define cost tracing?

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Define the term external failure costs.

A: Quality costs: Quality costs are costs that are incurred to avoid, identify and eliminate defects…

Q: Define the term conversion cost.

A: Conversion cost:  The cost of changing the materials into a finished product. It comprises direct…

Q: Define standard costs and explain how standard cost information is useful formanagement by…

A: Standard costs: These are the costs which a company determines as a standard to attain its…

Q: Define the following terms: differential cost, sunk cost, and opportunity cost.

A: Differential cost:  Differential cost is the change in total cost due to increase or decrease in…

Q: Distinguish between traceable and common fixed costs.

A: Fixed costs are referred to as the costs that do not change with a change in the level of the…

Q: Explain one example of the cost driver.

A: Cost drivers are used in Activity Based Costing. Cost drivers are used to allocate overhead costs to…

Q: Define direct material costs with an example?

A: Cost: Cost refers to the expenses incurred by the business to earn revenue from sales, in other…

Q: What is a relevant cost?

A:

Q: Define Replacement cost.

A: Replacement cost is defined as the measure of cash required to change the current resource with a…

Q: Explain the benefits of standard costs.

A: Standard costs means budgeted or predetermined cost for a unit of a business. For example, in…