Advantages of Throughput Costing Include All of the Following EXCEPT

question 41

Multiple Choice

Advantages of throughput costing include all of the following EXCEPT

• A)throughput costing reduces management's tendency to build inventory levels over which to spread fixed manufacturing costs of production.
• B)throughput costing motivates managers to reduce operating costs such as direct labour and variable overhead, which are treated as period costs rather than product costs.
• C)throughput costing is simpler than normal costing or absorption costing since all manufacturing overhead is expensed as a period cost immediately.
• D)throughput costing motivates managers to reduce operating costs such as direct materials and variable overhead, which are treated as period costs rather than product costs.

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Definitions:

Target

In a business context, a target can refer to a specific goal or benchmark aimed to be achieved, such as sales targets or performance targets.

Individual Identity

The distinctive characteristics or personality that makes a person unique from others.

Typical Consolidation

The process of combining multiple financial statements from different entities into one aggregate financial statement.

Net Present Value

A calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate, to determine its profitability.