An Avoidable Cost Is a Cost That Can Be Eliminated

question 66

True/False

An avoidable cost is a cost that can be eliminated (in whole or in part)as a result of choosing one alternative over another.

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Definitions:

Allocation Bases

Criteria or methods used for distributing indirect costs to different products, services, or departments based on predefined factors such as labor hours, machine hours, or material costs.

Direct Labor Hours

Measures the total hours worked by employees directly involved in the production process, used for calculating labor costs and efficiency.

Machine Hours

A measure of the amount of time a machine is operated, used to allocate machine costs to products or job orders.

Single Plantwide Rate

A method of allocating manufacturing overhead to products using one uniform overhead rate throughout the entire plant or factory.