Cost-volume-profit analysis is used to make many decisions, including product pricing and controlling costs. Are these assumptions always valid?

Q: explain why GAAP requires full absorption costing (instead of variable costing) if absorption…

A: Introduction:- i)Absorption costing:- Under the absorption costing, The following costs included in…

Q: How important is it to trace costs appropriately?  Explain. As you are beginning to think about the…

A: Solution:- 1)Discussion of How important is it to trace costs appropriately as follows under:-…

Q: Discuss the merits and demerits of the cost volume profit analysis (CVP)

A: Cost volume profit analysis is one of the important concept used in cost accounting. Under this…

Q: Why do managers consider Direct Coasts to be more accurate than Indirect  Costs?  How do managers…

A: Direct costs are the costs which are directly identifiable in the manufacturing process.  Indirect…

Q: What is a product cost? What is a period cost? What is the difference and why is it important to…

A: Product cost refers to all costs directly pertaining to the production of a product. While, Period…

Q: What is variable costing? How does it differ from absorpotion costing? Which can better be used to…

A: Variable Costing is a costing method where variable expenses change in proportion with production.…

Q: In a drop or continue decision, only the variable costs identified with a product are relevant in a…

A: The given statement is true.

Q: In CVP Analysis, total costs are defined as costs derived from product costs and period costs. TRUE…

A: Cost-volume-profit analysis is used to determine how the company's profit has been affected due to…

Q: Briefly explain how product costs are viewed on a flow-of-activity basis.

A: Product costs on a flow-of-activity basis involve looking at the costs associated with the…

Q: ariable costing is sometimes called a. differential b. direct

A: Variable costing is a costing system under which those costs of production that vary with output are…

Q: ivity analysis, and how is it used with cost driver analysis to manage costs and increase profits?…

A: An organization might use activity analysis as a management tool to recognize and comprehend the…

Q: Which of the following statements is true of ABC systems? A) ABC systems are time-driven cost…

A: Activity-based costing (ABC) is a method of assigning overhead based on activities, which are…

Q: Which format of the Income Statement is appropriate for financial reporting? O Variable costing O…

A: The appropriate format for the Income Statement for financial reporting is typically the Absorption…

Q: The simplifying assumption that costs and volume vary in straight-line relationships makes the…

A: Cost Volume Profit Analysis is a method of costing that has an impact on the varying levels of cost…

Q: Which of the following is not an application of cost-volume-profit analysis? Setting prices…

A: The objective of the question is to identify which of the given options is not an application of…

Q: 2. What is cost-volume-profit analysis and what are the important assumptions of this analysis?

A: Profit analysis entails dissecting a company's reported profit figure to determine the true extent…

Q: A cost - based transfer price considers the cost of producing the goods when determining the price.…

A: At the time of determining the prices of the goods, the cost of goods-producing is required to be…

Q: Cost-volume-profit analysis is used to make many decisions, including product pricing and…

A: The cost volume profit analysis is used to assess how the firm’s profit is affected if there is a…

Q: Which of the following is NOT considered in cost-volume-profit analysis?

A: Answer: opportunity costs.

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.