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:

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of wealth maximization.

Discount Rate

The discount rate refers to the interest rate applied in discounted cash flow analysis to calculate the present value of future cash flows.

Annual Cash Inflows

The total amount of money received by a business from its operations, investments, and financing activities over the course of a year.

Curb-Forming Machine

A specialized construction equipment used for shaping concrete curbs, gutters, and sidewalks by guiding prepared concrete into the desired shapes.