Depreciation Allocated to a Product Line Is a Relevant Cost

question 153

True/False

Depreciation allocated to a product line is a relevant cost when deciding to discontinue that product.

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Definitions:

Prototype Testing

The process of evaluating a preliminary model of a product to assess its performance, design, and reliability before it goes into mass production.

Batch Level Activity

Operations or tasks that are performed on groups of products together, typically as a step within the production process, where costs are incurred for the batch as a whole rather than for individual units.

Unit Level Activity

Activities that vary with the number of units produced or sold, directly impacting the cost of goods or services.

Direct Labour-Hours

The total hours worked by employees that can be directly attributed to the production of goods or services.