When Product Costs Are Used for Decision-Making,what Assumption Is Most

question 52

Multiple Choice

When product costs are used for decision-making,what assumption is most likely to distort the decisions?

• A) There is a proportionality of overhead costs and output,regardless of whether a product is dropped or not.
• B) Some overhead estimates can decrease when a product is dropped.
• C) Some overhead costs could be fixed when a product is dropped.
• D) The cost accounting system treats all overhead as if it were variable with respect to the allocation base.

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Definitions:

Saving Function

As income rises, saving rises, but not as quickly.

MPC (Marginal Propensity To Consume)

The proportion of an increase in income that a consumer spends on additional goods and services, rather than saving.

MPC (Marginal Propensity To Consume)

The proportion of an additional income that an individual tends to spend on consumption rather than saving.

GDP

Gross Domestic Product refers to the total monetary value of all goods and services produced within a country's borders in a given time frame, serving as an indicator of its economic performance.