MBA 102

MANAGEMENT ACCOUNTING - Solutions Manual CHAPTER 14 FUNCTIONAL AND ACTIVITY-BASED BUDGETING

. Questions 1. a. Variable cost: A variable cost is one that remains constant on a per unit basis, but which changes in total in direct relationship to changes in volume. b. Fixed cost: A fixed cost is one that remains constant in total amount, but which changes, if expressed on a per unit basis, inversely with changes in volume. c. Mixed cost: A mixed cost is a cost that contains both variable and fixed cost elements. 2. a. Unit fixed costs will decrease as volume increases. b. Unit v...

I. Questions 1. The three levels available are: Level 1, in which a company uses a plantwide overhead rate; Level 2, in which a company uses departmental overhead rates; and Level 3, in which a company uses activity-based costing. 2. New approaches to costing are needed because events of the last few decades have made drastic changes in many organizations. Automation has greatly decreased the amount of direct labor required to manufacture products; product diversity has increased in that...

I. Questions 1. The three levels available are: Level 1, in which a company uses a plantwide overhead rate; Level 2, in which a company uses departmental overhead rates; and Level 3, in which a company uses activity-based costing. 2. New approaches to costing are needed because events of the last few decades have made drastic changes in many organizations. Automation has greatly decreased the amount of direct labor required to manufacture products; product diversity has increased in that...

MANAGEMENT ACCOUNTING - Solutions Manual CHAPTER 7 COST CONCEPTS AND CLASSIFICATIONS I. Questions 1. The phrase “different costs for different purposes” refers to the fact that the word “cost” can have different meanings depending on the context in which it is used. Cost data that are classified and recorded in a particular way for one purpose may be inappropriate for another use. 2. Fixed costs remain constant in total across changes in activity, whereas variable costs change i...