Question

In each of the following situations, determine whether the company would be more likely or less likely to benefit from refining its costing system.

1. In bidding for jobs, managers lost bids they expected to win and won bids they expected to lose
2. The company operates in a very competitive industry.
3. The company produces few products, and the products consume resources in a similar manner.
4. The company has very few indirect costs
5. The company produces high volumes of some of its products and low volumes of other products.
6. The company has reengineered its production process but has not changed its accounting system

Answer 1

Answer and Explanation:

The classification is as follows;

a. When the lost bids could be wins and won bids could be lose so it is most likely

b. When the company operates in the industry i.e. competitive so it is most likely

c. When the company generates less products and products are consumed in same way so it is less likely

d. When the company has less non-direct cost so it is less likely

e. When the company generated the high volume of products and some products are of less volume so it is most likely

f. When the company reengineered the process of the production but not varied the accounting system so it is most likely