It Is Important That the Product Costs Reflect as Much

question 58

Multiple Choice

It is important that the product costs reflect as much of the diversity and complexity of the manufacturing process so that:

• A)product costs will reflect their relative consumption of resources.
• B)better information related to resource constraints can be captured and communicated.
• C)there is more likelihood of cost distortions.
• D)All of the above are correct.

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Definitions:

Unit Cost

Unit cost is the total expense incurred to produce, store, and sell one unit of a product or service, including both fixed and variable costs.

Operating Profit

Income from business operations after operating expenses are subtracted from gross profits, but before taxes and interest expenses.

Operating Expense

ongoing costs for running a product, business, or system.

Operating Profit

The earnings of a business from its core operations, excluding the effects of interest and taxes.