Change in Estimate, Voluntary Change in Accounting Policy, Correction of Errors

question 15

Essay

Change in estimate, voluntary change in accounting policy, correction of errors
Give examples and discuss the accounting procedures and disclosure required for the following:
1. Change in estimate
2. Voluntary change in accounting policy
3. Correction of an error

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Definitions:

Controllable Costs

Expenses that can be influenced or managed by decisions made by specific managers or departments within an organization.

Relevant Range

The range of activity within which the assumptions about cost behavior for a company are valid.

Maximum Capacity

The highest level of output or activity that a company can sustain within a specific period under normal operating conditions.

Fixed Cost

Refers to expenses that do not change in total regardless of the level of production or sales volume, such as rent or salaries.