The three guidelines for refinement include: OA. 1. Classify as many of the total costs as direct costs as is economically feasible. 2. Expand the number of indirect cost pools until each of these pools is more homogenous. 3. Use the cause-and-effect criterion, when possible, to identify the cost-allocation base for each indirect-cost pool. OB. 1. Identify the products that are the chosen cost objects. 2. Identify the direct and indirect costs of the products. 3. Compute the total cost of the products by adding all direct and indirect costs assigned to the products. OC. 1. Set cost reduction targets in terms of reducing the cost per unit of a cost-allocation base in different activity areas. 2. Perform an analysis of the factors that cause costs to be incurred (cost drivers) in order to identify opportunities for improving the way work is done. 3. Evaluate whether particular nonvalue-added activities can be reduced or eliminated. OD. 1. Select the activities and cost-allocation bases to use for allocating indirect costs to the products. 2. Identify the indirect costs associated with each cost-allocation base. 3. Compute the rate per unit of each cost-allocation base.

The three guidelines for refinement include: OA. 1. Classify as many of the total costs as direct costs as is economically feasible. 2. Expand the number of indirect cost pools until each of these pools is more homogenous. 3. Use the cause-and-effect criterion, when possible, to identify the cost-allocation base for each indirect-cost pool. OB. 1. Identify the products that are the chosen cost objects. 2. Identify the direct and indirect costs of the products. 3. Compute the total cost of the products by adding all direct and indirect costs assigned to the products. OC. 1. Set cost reduction targets in terms of reducing the cost per unit of a cost-allocation base in different activity areas. 2. Perform an analysis of the factors that cause costs to be incurred (cost drivers) in order to identify opportunities for improving the way work is done. 3. Evaluate whether particular nonvalue-added activities can be reduced or eliminated. OD. 1. Select the activities and cost-allocation bases to use for allocating indirect costs to the products. 2. Identify the indirect costs associated with each cost-allocation base. 3. Compute the rate per unit of each cost-allocation base.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.

Question

The three guidelines for refinement include:
O A. 1. Classify as many of the total costs as direct costs as is economically feasible.
2. Expand the number of indirect cost pools until each of these pools is more homogenous
3. Use the cause-and-effect criterion, when possible, to identify the cost-allocation base for each indirect-cost pool.
OB. 1. Identify the products that are the chosen cost objects.
2. Identify the direct and indirect costs of the products.
3. Compute the total cost of the products by adding all direct and indirect costs assigned to the products.
O C. 1. Set cost reduction targets in terms of reducing the cost per unit of a cost-allocation base in different activity areas.
2. Perform an analysis of the factors that cause costs to be incurred (cost drivers) in order to identify opportunities for improving the way work is done.
3. Evaluate whether particular nonvalue-added activities can be reduced or eliminated.
O D. 1. Select the activities and cost-allocation bases to use for allocating indirect costs to the products
2. Identify the indirect costs associated with each cost-allocation base.
3. Compute the rate per unit of each cost-allocation base.

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