Final answer:
The statement is false because the allocation of amounts in multiple-deliverable arrangements is based on the relative selling price of each unit, not the cost of manufacturing. Understanding various cost structures is essential in strategic financial planning for long-term profitability.
Step-by-step explanation:
The statement provided is false. When dealing with multiple-deliverable arrangements, the amount paid for the entire arrangement is not allocated among the separate units based on the cost of manufacturing each separate unit. Instead, the allocation is generally based on each deliverable's relative selling price. The VSOE (Vendor Specific Objective Evidence), TPE (Third Party Evidence), or BESP (Best Estimated Selling Price) approaches are used to determine the selling price of each unit, which then forms the basis for allocation.
In business accounting, understanding the cost structures such as fixed and variable costs, average total cost, average variable cost, and marginal cost is crucial for long-term production planning and analysis. This forms a key aspect of the firm's strategic financial decisions to maximize profitability, taking into consideration the market structure they operate within.