The Principle of Parsimony Indicates That the Simplest Model That

question 8

True/False

The principle of parsimony indicates that the simplest model that gets the job done adequately should be used.

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Definitions:

Denominator Level

The level of activity chosen to allocate fixed costs in absorption costing, often representing capacity or expected production volume.

Variable Overhead Rate

the rate at which variable overhead costs are applied to units of production, often used in calculating the total cost of producing a product.

Fixed Manufacturing

Costs associated with manufacturing that remain constant, regardless of the level of production, such as rent for factory premises.

Variable Overhead

Costs that vary with production volume but cannot be traced directly to each unit produced, such as utilities for the manufacturing plant.