Which of Following Statements Is TRUE of Short-Term Decision Making

question 126

Multiple Choice

Which of following statements is TRUE of short-term decision making?

• A) Fixed costs and variable costs must be analyzed separately.
• B) All costs behave in the same way.
• C) Unit manufacturing costs are variable costs.
• D) All costs involved in a decision are considered relevant.

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into full units of output for reporting purposes.

Work in Process Inventory

Items that are partway through their manufacturing process but have not yet reached their final form.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measured in terms of the amount of finished goods those partial items represent.

Weighted Average Method

A cost accounting method that calculates the cost per unit of inventory by considering the weight of each period’s inventory cost.