Full-Cost Pricing Would Discourage Producers from Inventing More Resource-Efficient Methods

question 34

True/False

Full-cost pricing would discourage producers from inventing more resource-efficient methods of production,thereby cutting production costs.

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Definitions:

Efficiency Variances

Refers to the differences between the actual and standard costs attributable to efficiency in using resources, often analyzed in labor and variable overhead.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, based on a chosen activity base.

Denominator Level

In cost accounting, it refers to the standard quantity or activity used in calculating the predetermined overhead rate.

Variable Overhead Rate

The rate at which variable overhead costs are allocated to products, changing with the level of production.