A Cost Is Not Relevant for Decision Making If It

question 103

Multiple Choice

A cost is not relevant for decision making if it:

• A) Does not differ for each option available to the decision maker.
• B) Changes from period to period.
• C) Is a future cost.
• D) Is a mixed cost.
• E) Is a fixed cost.

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Definitions:

Overhead Assigned

Refers to the allocation of indirect costs to products, services, or cost centers.

Product U4

Product U4 is a designated name for a specific product, possibly indicating its position or type within a wider range of products offered by a company or manufacturer.

Traditional Costing

A costing methodology that assigns overhead costs to products based on a predetermined rate, often using direct labor hours as the allocation base.

Activity-Based Costing

Activity-Based Costing is a method of allocating overhead to specific products or services based on the activities that contribute to overhead costs.