To Be Charged to and Reported as Part of the Cost

question 25

True/False

To be charged to and reported as part of the cost of property,plant and equipment,an expenditure must be normal,reasonable,and necessary in preparing the asset for its intended use.

---

Definitions:

Cost Driver Analysis

The examination of factors that influence the cost of a product or service, aimed at finding ways to improve efficiency and reduce expenses.

Root Cause

The fundamental reason for the occurrence of a problem, which when resolved, prevents a recurrence of that problem.

Cost Drivers

Factors that cause a change in the cost of an activity, including production volume, labor hours, and machine hours.

Process Perspective

An approach focusing on the activities and workflows in an organization to improve processes and achieve strategic goals.