A Program to Reduce Inflation Is Likely to Have Lower

question 41

Multiple Choice

A program to reduce inflation is likely to have lower costs if the sacrifice ratio is

• A)high and the reduction is unexpected.
• B)high and the reduction is expected.
• C)low and the reduction is unexpected.
• D)low and the reduction is expected.

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Definitions:

Cost Driver

A factor that causes the cost of an activity or process to change, used in activity-based costing to allocate costs.

Dual Rate

A cost allocation method that separates costs into fixed and variable elements, applying different rates for each in costing calculations.

Single Rate

A method used in cost accounting where a single overhead rate is applied to all units produced, regardless of the department in which they were produced or the resources they consumed.

Fixed Costs

Fixed expenditures that are unaffected by production or sales volumes, encompassing rent, salaries, and insurance.