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The differential analysis approach to pricing for special orders could lead to under-pricing in the long-run because fixed costs are not included in the analysis Select one: True False

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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Question

The differential analysis approach to pricing
for special orders could lead to under-pricing
in the long-run because fixed costs are not
included in the analysis
Select one: True False

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Product costs under variable costing are typically: Question 1 options: lower than under absorption costing higher than under absorption costing the same as with absorption costing higher than absorption costing when inventory increases
Relevant of differential cost analysis takes all variable and fixed costs into account to analyze decision alternatives considers only variable costs as they change with each decision alternative considers the change in reported net income for each alternative to arrive at the optimum decision for the company considers all variable and fixed costs as they change with each decision alternatives The term that refers to costs incurred in the past that are not relevant to a future decision is full absorption cost sunk cost incurred marginal cost under allocated indirect cost
Fixed costs will often be irrelevant for short-term decision making because they: Do not vary on a per-unit-of-output basis. O Are the same each time period. Typically do not differ in total between decision alternatives being considered. O Are not committed. Cannot be estimated with precision.
Differentiate among market orders, limit orders, and stop-loss orders. What is the rationale for using a stop-loss order rather than a limit order?
if we produce goods over the capacity, should we consider the fixed marketing cost and variable marketing cost when making the decision to accept or reject a special offer?
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Explain why cost predictions based on the same cost driver can differ when applying the high-low method and regression analysis. State one advantage and one disadvantage of the high-low method.
Explain why the standard costing system may have limited benefit in times of rapid change and uncertainty such as the recent past with major supply chain and price variations occurring constantly