Cost Accounting (15th Edition)
15th Edition
ISBN: 9780133428704
Author: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 14, Problem 14.10Q
“A company should not allocate costs that are fixed in the short run to customers.” Do you agree?
Explain briefly.
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“It is not important for a company to distinguish between cost incurrence and locked-in costs.” Do you agree? Explain.
When companies consider outsourcing a product, fixed costs are always irrelevant.
Question 31 options:
True
False
assi
C
rrat
Which of the following is not a factor to consider when deciding whether to accept a special order?
Select one:
O
A. Whether this order will hurt the brand name of the company
B. Whether the offered price is sufficient to cover prime costs and fixed overhead allocated
C. Whether other potential orders would be more profitable
D. Whether additional fixed costs would need to be incurred
E. All of the above
Chapter 14 Solutions
Cost Accounting (15th Edition)
Ch. 14 - Prob. 14.1QCh. 14 - Why is customer-profitability analysis an...Ch. 14 - Prob. 14.3QCh. 14 - A customer-profitability profile highlights those...Ch. 14 - Give examples of three different levels of costs...Ch. 14 - What information does the whale curve provide?Ch. 14 - A company should not allocate all of its corporate...Ch. 14 - What criteria might managers use to guide...Ch. 14 - Once a company allocates corporate costs to...Ch. 14 - A company should not allocate costs that are fixed...
Ch. 14 - How should a company decide on the number of cost...Ch. 14 - Show how managers can gain insight into the causes...Ch. 14 - How can the concept of a composite unit be used to...Ch. 14 - Explain why a favorable sales-quantity variance...Ch. 14 - How can the sales-quantity variance be decomposed...Ch. 14 - Prob. 14.16ECh. 14 - Prob. 14.17ECh. 14 - Prob. 14.18ECh. 14 - Prob. 14.19ECh. 14 - Prob. 14.20ECh. 14 - Prob. 14.21ECh. 14 - Prob. 14.22ECh. 14 - Prob. 14.23ECh. 14 - Prob. 14.24ECh. 14 - Prob. 14.25ECh. 14 - Prob. 14.26ECh. 14 - Prob. 14.27PCh. 14 - Prob. 14.28PCh. 14 - Prob. 14.29PCh. 14 - Prob. 14.30PCh. 14 - Prob. 14.31PCh. 14 - Prob. 14.32PCh. 14 - Prob. 14.33PCh. 14 - Prob. 14.34PCh. 14 - Prob. 14.35PCh. 14 - Prob. 14.36PCh. 14 - Prob. 14.37PCh. 14 - Prob. 14.38PCh. 14 - Customer profitability and ethics. KC Corporation...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A company accepts incremental business at a special price that exceeds the variable cost. What other issues must the company consider in deciding whether to accept the business?arrow_forwardWhy do companies allocate costs? What are some of the advantages and disadvantages to doing so?arrow_forwardWhich one of the following statement is not correct? O Both fixed and variable costs influence short-term decision-making. O Short-term decision-making is all about analysing those costs that will change as a result of taking a particular action. O Opportunity costs are only considered when resources are limited. O Break-even analysis is used to determine how many units of a product or a service a business has to sell to cover all its costs.arrow_forward
- Break-even analysis is of limited use to management because a company cannot survive by just breaking even." Do you agree with this statement? Please explain. Discuss the components of the Contribution Margin Income Statement, how does management use this in the decision making process?arrow_forwardCompanies that use OSD can deduct the cost of sales or the cost of services. Is it true or false?arrow_forwardWhich one of the following statement is not correct? Group of answer choices -Opportunity costs are only considered when resources are limited. -Break-even analysis is used to determine how many units of a product or a service a business has to sell to cover all its costs. -Both fixed and variable costs influence short-term decision-making. -Short-term decision-making is all about analysing those costs that will change as a result of taking a particular action.arrow_forward
- 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.arrow_forward“Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.”Do you agree? Explain.arrow_forwardWhy would a firm ever offer a price on a product that is below its full cost?arrow_forward
- Which of the following is NOT correct about Contribution concept? Select one: a. Contribution can be calculated by using total values or per-unit values. b. Contribution helps to recover fixed costs of the company. c. Contribution is the difference between sales and fixed costs. d. At break-even point, contribution is equal to fixed costs.arrow_forward"Simplification of all costs into only fixed and variable costs distorts the actual cost behavior pattern of a firm. Yet businesses rely on this method of cost classification." Commentarrow_forwardWhich of the following costs are irrelevant to business decisions? a. Avoidable costs b. Costs that differ between alternatives c. Sunk costs d. Variable costsarrow_forward
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