If a Firm Is Following the Cost Leadership Strategy, and Overhead

question 103

Multiple Choice

If a firm is following the cost leadership strategy, and overhead accounts are complex, then the:

• A)Firm should use a process costing system.
• B)Firm can use either a project or job costing system.
• C)Traditional volume-based job costing will not usually provide the needed cost accuracy.
• D)Only recourse is to install a hybrid costing system.
• E)Firm should attempt to collect only material and labor costs.

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Definitions:

Coupon Bond

A debt security that pays the investor periodic interest payments called coupons and returns the principal at the end of the maturity.

Par Value

Par Value is the face value of a bond or stock as stated by the issuer, which might not reflect its market value.

Yield To Maturity

The total return expected on a bond if held till its maturity date, including both interest payments and capital gains or losses.