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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

If computational and record-keeping costs are about the same under both FIFO and weighted-average costing, which method, if any, will generally be preferred? Multiple Choice Weighted-average costing FIFO costing None of these. The answer cannot be determined with so little information.
Which among the following is not true about traditional costing system? a. This method allocates greater proportion of overheads to high volume products b. This method avoids the phenomenon of product cost cross subsidization c. This method allocates smaller proportion of overheads to low volume products d. This method leads to cost smoothing
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.
Which 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.
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Which of the following statements regarding marginal costing is incorrect? Select one: O A. It is useful long-term planning technique OB. It assumes that fixed costs remain fixed over relevant activity ranges O C. It assumes that variable costs vary in proportion to activity O D. It assumes that costs can be classified as variable or fixed
“In decision making, full (absorption) costing approach has become entirely useless as it leads to wrong decisions”. Provide examples and evaluate the statement.
Briefly explain the potential negative consequences in pricing decisions from using a traditional, volumebased product-costing system.