When Product Costs Are Used for Decision-Making, What Assumption Is

question 20

Multiple Choice

When product costs are used for decision-making, what assumption is most likely to distort the decisions?

• A) There is a proportionality of overhead costs and output, regardless of whether a product is dropped or not.
• B) Some overhead estimates can decrease when a product is dropped.
• C) Some overhead costs could be fixed when a product is dropped.
• D) The cost accounting system treats all overheads as if it were variable with respect to the allocation base.

---

Definitions:

Continuation Statement

A statement that, if filed within six months prior to the expiration date of the original financing statement, continues the perfection of the original security interest for another five years. The perfection of a security interest can be continued in the same manner indefinitely.

Perfected

In legal terms, refers to a secured interest in a piece of property that has been properly filed or registered, ensuring priority over claims from other creditors.

Financing Statement

A document filed by a secured creditor to give public notice of their security interest in a debtor's personal property.

Note

A brief record of facts, topics, or thoughts written down as an aid to memory.