Which of the Following Is an Advantage of Using Full

question 2

Multiple Choice

Which of the following is an advantage of using full cost of the product as the cost base?

• A) Managers are informed regarding the minimum long-run cost they need to recover to stay in business.
• B) Using the full cost of the product as a basis for pricing increases the temptation to cut prices below full costs.
• C) Fixed cost allocations can be arbitrary while using full cost of the product as the cost base.
• D) It requires a detailed analysis of cost behavior for computations and hence promotes a better understanding of the cost behavior.

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Definitions:

Carbon Dioxide

A gas without color or smell, created from burning carbon and organic compounds, and emitted during breathing, which is taken in by plants during the process of photosynthesis.

Arsenic

Referred to as a semimetallic chemical element, recognized for its role in historical poisoning cases, it has applications in electronics and wood preservation.

Lethal Dosage

The amount of a substance required to cause death in a living organism, often abbreviated as LD.

Mg

The chemical symbol for magnesium, a shiny gray solid that has the atomic number 12 and is an essential element for living cells.