Comment on the problems that may follow from a decision to increase the overhead absorption rate in conditions when cost –plus pricing is used and overhead is currently underabsorbed. giving a bold illustration.

Q: What is meant by an activity base when dealing with variable costs? Give several examples of…

A:

Q: When making outsourcing decisions, which of the following is true? a. Expected use of the freed…

A: When making decision on make or buy decision or which are otherwise called as Outsourcing decisions,…

Q: se explain the answer thoroughly.  Is this statement "if all the allocation base in the…

A: Allocation base in the predetermined overhead rate is the percentage of overhead which will be…

Q: Which of the following is a limitation of activity-based costing? More cost pools Poorer management…

A: Introduction: ABC costing also called as Activity based costing. According to the consumption cost…

Q: Which of the following is an example of an indirect cost? Multiple Choice Cost of labor Cost of…

A: Indirect Cost are expenses other than direct expenses are known as indirect  expenses. These cannot…

Q: The reason for some costs to be mixed in nature is? A. Presence of sunk cost in the cost structure.…

A: Fixed costs are those costs which do not change with change in level of activity like Rent Expense…

Q: Marginal costing can provide useful information for decision-making. However, there are limitations…

A: There are various limitations of marginal costing few of them are stated below.

Q: What is different than traditional costing that uses a volume-based driver? Can you give me some…

A: There are many different types of costing methods, out of which the selection of costing method to…

Q: Describe one advantage and one disadvantage of prorating overapplied or underapplied overhead.

A:

Q: What are the factors that affect the breakeven point under (a) variable costing and (b) absorption…

A: Breakeven Point:The level of production that is required to cover the fixed costs and variable costs…

Q: Explain why a costing system that uses a volume-based rate is likely to produce distorted…

A: A traditional volume-based cost allocation systems that use only drivers tend to vary directly with…

Q: When comparing absorption costing to variable costing, all of the below are disadvantages of…

A: Solution: When comparing absorption costing to variable costing, all of the below are disadvantages…

Q: Timing is the key in distinguishing between absorption and variable costing. Explain this statement.

A: Definition: Variable costing: It refers to the method of product costing in which the price of the…

Q: Explain how far you agree that the Activity-Based-Costing system is a superior model compared to the…

A: Cost accounting is considered as a process that is followed by a business to estimate the total cost…

Q: When standard costs are used in applying the cost-plus approach to product pricing, the standards…

A: False No, the standards should not be based upon normal levels of performance.

Q: Management believes that electrical cost is a mixed cost that depends on machine-hours. Using the…

A: High low method: Variable cost per unit = (Highest activity cost - Lowest activity cost) / (Highest…

Q: Demonstrate why expressing fixed costs on a per unit of activity basis is misleading and may result…

A: Companies can have two types of costs, fixed costs and variable costs, which together result in…

Q: What does it means when the Overhead rates in the direct method have a figure which is higher than…

A: Overheads: It refers to the business indirect expenses that are required to run a business activity.…

Q: When using the visual-fit method to estimate a cost function, we can estimate the fixed cost by O…

A: Visual Fit Method  It is the most common method used by analysts for examining the cost by the way…

Q: What is the reason for pooling costs? O a. To shift costs from low-volume to high-volume products. O…

A: Cost mean different expenses incurred by the manufacturing concern to make a product available to…

Q: When a traditional, volume-based costing system is used, which of the following products is most…

A: Accounting:   Accounting is the art of recording, classifying and summarizing in a significant…

Q: When a traditional, volume-based costing system is used, which of the following products is most…

A: Traditional costing is the allocation of factory overhead to products based on the volume of…

Q: Give an example of how, under absorption costing, operating income could fall even though the unit…

A: Definition:   Absorption Costing: The absorption costing is a method used to allocate the fixed…

Q: how to solve plantwide overhead rate versus departmental rates, effects on pricing decisions?

A: Since there are multiple sub parts in the question, calculation will be given for first three sub…

Q: Which costing system would be more efficient when direct materials and direct labor costs are high,…

A: There are mainly two types costing method Traditional costing Activity based costing

Q: Based on below, Activity-Based Costing and Analysis Cost Behavior and Cost-Volume-Profit Analysis…

A: Under cost-profit volume analysis, the break-even point is that level of production where the…

Q: How do fixed costs create difficulties in costing units of product

A: Fixed costs are the costs that do not tend to fluctuate with change in production levels in the…

Q: Which of the following option is correct regarding difference in activity-based costing when…

A: Simple costing and activity based costing does not yield in similar since the cost drivers will…

Q: Which of the following statements is not true regarding the use of variable and absorption costing…

A: Answer:   Option d.

Q: Give examples of possible costs associated with a high level of gearing

A: A firm’s capital structure is generally comprised of Debt and Equity. The proportion of debt in the…

Q: Marginal costing is a technique that distinguishes between variable costs and fixed costs. In this…

A: Cost-volume-profit (CVP) analysis is an important and systematic method that provides useful…

Q: In detail discuss what are  the advantages and disadvantages of using FIFO for process costing. In…

A: First-in First-out(FIFO) method under process costing is based on the assumption that at the…

Q: Which of the following is true about the hypothesis test of cost parameters? a) It indicates whether…

A: Hypothesis testing refers to the form of inferable statistics which allows us in making conclusions…

Q: Represent the cost that will be affected by the decision being considered. Margin of Safety…

A: The relevant and irrelevant costs are important in decision making.

Q: Briefly explain the potential negative consequences in pricing decisions from using a traditional,…

A:

Q: Disadvantages of activity-based costing include which of the following? a. It is not acceptable…

A: Answer; d. Both a. and b.

Q: Discuss the advantages and disadvantages of using variable costing in an essay form

A: Answer: Variable costing system is the costing system that helps to easy analyze the company profit…

Q: How to do absorption and marginal costing?

A: The income statement can be prepared using Marginal costing and absorption costing.