A cost that change in total proportionately with a change in the cost driver is
ID: 2483128 • Letter: A
Question
A cost that change in total proportionately with a change in the cost driver is average cost. controllable cost. variable cost. differential cost. marginal cost. A cost that differs between the decision options and will be incurred in the future is a variable cost. relevant cost. marginal cost. controllable cost. discretionary cost. The benefit lost when one option is chosen that precludes the benefits from an alternative option is a (n) sunk cost. discretionary cost. discrete cost. differential cost. opportunity cost. The most objective basis for allocating costs occurs: When the costs can be directly traced to a cost object. When a cause and effect relationship can be determined. More frequently in manufacturing than in service firms. When allocation is based on the size of the department using the service When the data is totally objective Which is the correct sequence in planning Set goals, prepare budget, develop strategy. Prepare budget, set goals, develop strategy. Set goals, develop strategy, prepare budget. Develop strategy, set goals, prepare budget. All three activities (goals, budget) happen simultaneously.Explanation / Answer
12. B) Variable cost
Variable costs are those costs that vary in total amount directly and proportionately with the output. There is a constant ratio between the change in the cost and change in the level of output. Direct material cost and direct labour cost are the costs which are generally variable costs.
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B) Relevant cost
A relevant cost is a cost that only relates to a specific management decision, and which will change in the future as a result of that decision. The relevant cost concept is extremely useful for eliminating extraneous information from a particular decision-making process
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E) opportunity cost
he cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.
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b) when a cause and effect relationship can be determined.
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