Which Type of Cost Provides Managers with More Control and Why

question 10

Essay

Which type of cost provides managers with more control and why?

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Definitions:

Amortization

The process of spreading out a loan into a series of fixed payments over time, where part of each payment goes toward the principal amount borrowed and part goes toward interest.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Tangible Assets

Tangible assets are physical assets that have a finite monetary value and physical presence, such as machinery, buildings, and land.

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained and not paid out as dividends to shareholders but reinvested in its core business or to pay debt.