Which Cost Estimation Method Would Involve Analyzing Direct Labor Subsidiary

question 109

Multiple Choice

Which cost estimation method would involve analyzing direct labor subsidiary accounts and classifying costs as as variable, fixed, or mixed to derive cost estimation formulas?

• A) the account analysis method
• B) the conference method
• C) the marginal costing method
• D) the incremental costing method

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Definitions:

Operating Expense

Expenses incurred from a company's operational activities, excluding cost of goods sold, such as selling, general, and administrative expenses.

Minimum Required Rate of Return

The lowest acceptable return on investment for a project or investment, often determined by the cost of capital or desired profit.

Gross Margin

The variance between the revenue generated from sales and the cost incurred from goods sold, calculated as a fraction of the sales revenue.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues.