Question

What is the purpose of cost accumulation?

1) To identify fixed and variable costs
2) To calculate total cost
3) To determine the selling price
4) To analyze cost behavior

Answer 1

Cost accumulation in business involves analyzing cost behavior, identifying fixed and variable costs, calculating total cost, and evaluating patterns of costs to determine potential profit.

Step-by-step explanation:

The purpose of cost accumulation in business is to analyze cost behavior and determine the profitability of a firm. It involves identifying fixed and variable costs, calculating the total cost, and evaluating patterns of costs to determine potential profit.

Cost accumulation helps businesses understand their cost structure and make informed decisions about pricing, production quantities, and profit maximization.

By analyzing costs, businesses can determine the cost-effectiveness of their operations and identify areas where cost reductions can be made to improve profitability.