Explain the disadvantages that can result when cost-plus prices are based on absorption costs.

Question:

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Management Accounting

ISBN: 9781760421144

7th Edition

Authors: Kim Langfield Smith, Helen Thorne, David Alan Smith, Ronald W. Hilton

See More Books

Question Posted: Nov 01, 2017 06:25 AM

See More Questions

What are some of the disadvantages that can result when companies use channels of distribution to market their products overseas?
The 1970s were a period of historically high inflation. The 1976 financial statements of the Ford Motor Company included the following note: Note 1 (in part): Inventory valuation. Inventories are...
Whitecotton Company produces plastic bottles. The unit for costing purposes is a case of 18 bottles. The following standards for producing one case of bottles have been established: Direct materials...
Prove that there exist two languages A and B that are Turing-incomparablethat is, where A T B and B T A.
Water is added at varying rates to a 300-liter holding tank. When a valve in a discharge line is opened, water flows out at a rate proportional to the height and hence to the volume V of water in the...
1. What are the issues in this case? In what order should Andy Chin and Adeline Koh address them? 2. Should Koh approve the packaging machine investment? How did you analyze this issue? In July 2001,...
Suppose there are $n$ stocks. Each of them has a price that is governed by geometric Brownian motion. Each has $v_{i}=15 \%$ and $\sigma_{i}=40 \%$. However, these stocks are correlated, and...
Delphi Company has developed a new product that will be marketed for the first time during the next fiscal year. Although the marketing department estimates that $35,000 units could be sold at $36...
2. YA Y F FA 12 C 0=60 X In the figure, XY-coordinate system is the global coordinate System, and xy-coordinate system is the local coordinate system. The force vector at C on truss element is given...
Match the following and select the correct option. Height of Binary search tree(in worst o([log ]-1) 1 a (2n+1) case) Height of Ternary tree b O(n) Height of B-tree(when c minimum degree, -2) (log,...
Explain the difference between value-based pricing and economic value pricing?
In the example of return on investment pricing provided in this chapter, the markup percentage was different depending on which definition of product cost was used. Explain why the markup was...
Find the general solution of the equation dx dx +5- - 9x = 1 dt dt
The Ottey Corporation issued 10-year, $$4$,000,000 par, 7% callable convertible subordinated debentures on January 2, 2015. The bonds have a par value of $$1$,000, with interest payable annually....
As a cost accountant for San Francisco Cannery, you have been approached by Phil Perriman, canning room supervisor, about the 2015 costs charged to his department. In particular, he is concerned...
On February 1, 2015, Gruber Corporation issued 3,000 shares of its 5 par value ordinary shares for land worth 31,000. Prepare the February 1, 2015, journal entry.
On January 1, 2015, Lund Company issued 10-year, 3,000,000 face value, 6% bonds, at par. Each 1,000 bond is convertible into 15 ordinary shares of Lund. Lunds net income in 2016 was 240,000, and its...
Pawnee Inc. has issued three types of debt on January 1, 2015, the start of the companys fiscal year. (a) $10 million, 10-year, 13% unsecured bonds, interest payable quarterly. Bonds were priced to...
The intangible assets section of Glover Restaurants at December 31, 2019, is presented below. Patents (60,000 cost less 6,000 amortization) ..................................54,000 Franchises (48,000...
The following items were displayed in the statement of affairs for Lubbock Company: Fully secured liabilities ......... $90,000 Partially secured liabilities ....... 12,000 Unsecured liabilities...
An administrator at Saint Jude Hospital is considering how to use some space made available when the outpatient clinic moved to a new building. She has narrowed her choices, as follows: a. Use the...
Assume that a division of Bose makes an electronic component for its speakers. Its manufacturing process for the component is a highly automated part of a just-in-time production system. All labor is...
Assume that a division of Bose makes an electronic component for its speakers. Its manufacturing process for the component is a highly automated part of a just-in-time production system. All labor is...
The weekly salaries (in dollars) of 24 randomly selected employees of a company are shown below: 310 320 450 460 470 500 520 580 600 650 700 540 710 840 870 900 1000 1200 1250 1300 1400 1720 2500...
(a) Assume a non-dividend paying asset St, undergoes geometric Brownian motion dS = S+dt+S+dWt where W is a standard Brownian motion and and are constants. We assume also that r, the risk-free...
Eleanor is auditing a large manufacturing company. Currently, she is looking at the entire population of inventory purchases for the year, and matching the purchase order, receiving documentation,...

Explain the disadvantages that can result when cost-plus prices are based on absorption costs.

Question:

Step by Step Answer:

Three disadvantages of pricing based on absorption cost are as follows 1 Abso...View the full answer

Management Accounting

Students also viewed these Advanced Accounting questions