A Refined Costing System Provides Better Measurement of the Costs

question 117

True/False

A refined costing system provides better measurement of the costs of indirect resources used by different cost objects,no matter how differently various cost objects use indirect resources.

---

Definitions:

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance premiums.

Internal Rate of Return

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used to evaluate the profitability of potential investments.

Accounting Basis

Refers to the method of recording accounting transactions; either on a cash basis or on an accrual basis.

Required Return

The minimum return an investor anticipates or requires from an investment to make it worthwhile.