Which of the Following Is a Problem Related to Cost

question 20

Multiple Choice

Which of the following is a problem related to cost analysis?

• A) fixed costs are allocated as if they are variable costs
• B) extreme observations are adjusted or removed
• C) a company keeps accounting records on the accrual basis
• D) inflationary effects are removed

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Definitions:

Standard Rate

A predetermined rate often used for allocating costs to activities or products, based on budgeted or historical data.

Completed Unit

A unit of product that has undergone the entire production process and is ready for sale or distribution.

Direct Labor Time Variance

The difference between the actual hours worked by employees at the actual labor rate and the standard hours worked at the standard labor rate, used to measure efficiency and productivity in production.

Standard Costs

Predetermined or estimated costs for materials, labor, and overhead used for cost control and budgeting purposes.