Cost Accounting
15th Edition
ISBN: 9780133428834
Author: Horngren
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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When companies consider outsourcing a product, fixed costs are always irrelevant.
Question 31 options:
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Why do companies allocate costs? What are some of the advantages and disadvantages to doing so?
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
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_forwardis this still applicable if the company uses cost model?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
- 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_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“Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.”Do you agree? Explain.arrow_forward
- Why would a firm ever offer a price on a product that is below its full cost?arrow_forwardWhich 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_forwardWhich of the following is NOT a factor to be considered in a make or buy decision? O the availability of productive capacity O the effect on the future business relationship with a supplier O the fact that fixed factory overhead will not change O the fact that variable costs will not changearrow_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_forward1)What is cost behavior analysis? and Why is cost behavior analysis important to management? 2)“Break-even analysis is of limited use to management because a company cannot survive by just breaking even.” Do you agree? Agree or not agree, please describe your line of reasoning.arrow_forwardIn a make versus buy decision which of thefollowing factors is not relevant? fixed production costsreliability of supplierreliability of bought-in productsopportunity cost of alternative activitiesarrow_forward
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