“The distinction between precision and relevance should be kept in mind.” Explain.
Answer to relevant Questions“Basing pricing on only the variable costs of a job results in suicidal underpricing.” Do you agree? Why?The Kerwin Company had the following data (in thousands) for a given period:Sales ............. $780Direct materials ......... 180Direct labor ............ 230Indirect manufacturing costs .... 210Selling and administrative ...“Past costs are indeed relevant in most instances because they provide the point of departure for the entire decision process.” Do you agree? Why?There are two major reasons why unit costs should be analyzed with care in decision making. What are they?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 considered to be an ...
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