Management Accounting - Study Mode
[#351] In standard costing, standard quantity allocation is multiplied to standard overhead rates for allocating
Correct Answer
(C) overhead costs
Explanation
Solution: In standard costing, standard quantity allocation is multiplied to standard overhead rates for allocating overhead costs. Overhead costs refer to those expenses associated with running a business that can't be linked to creating or producing a product or service.
[#352] Cost of new machine is considered as
Correct Answer
(A) relevant
Explanation
Solution: Cost of new machine is considered as relevant. Relevant cost is a managerial accounting term that describes avoidable costs that are incurred only when making specific business decisions.
[#353] An investment of money in idle inventory, in place of investing same amount of money somewhere else is an example of
Correct Answer
(D) opportunity cost
Explanation
Solution: An investment of money in idle inventory, in place of investing same amount of money somewhere else is an example of opportunity cost. Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another.
[#354] Book value of existing equipment is a historical cost and not necessary for deciding equipment replacement, thus it can be considered as
Correct Answer
(B) sunk cost
Explanation
Solution: Book value of existing equipment is a historical cost and not necessary for deciding equipment replacement, thus it can be considered as sunk cost. A sunk cost is a cost that an entity has incurred, and which it can no longer recover.
[#355] Some of methods used for determining transfer prices are
Correct Answer
(D) all of above
Explanation
Solution: Some of methods used for determining transfer prices are market-based transfer prices, cost-based transfer prices and negotiated transfer prices.