Which of the Following Is an Advantage of Using Full

question 2

Multiple Choice

Which of the following is an advantage of using full cost of the product as the cost base?

• A) Managers are informed regarding the minimum long-run cost they need to recover to stay in business.
• B) Using the full cost of the product as a basis for pricing increases the temptation to cut prices below full costs.
• C) Fixed cost allocations can be arbitrary while using full cost of the product as the cost base.
• D) It requires a detailed analysis of cost behavior for computations and hence promotes a better understanding of the cost behavior.

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Definitions:

IRA Assets

Funds and investments held within an Individual Retirement Account (IRA), which can include stocks, bonds, mutual funds, and other financial assets.

Distribution

Payments made from a fund or account, often referring to dividends (company profits) paid to shareholders or withdrawals from retirement accounts.

Employer-Sponsored

A program or benefit provided by an employer to its employees, often including health insurance, retirement plans, and educational assistance.

Roth IRA

An individual retirement account allowing contributions to grow tax-free, with qualified distributions also being tax-free.