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1 year ago

Only variable costs can be differential costs. Do you agree? Explain.

Business

1 answer:

Nostrana [21]1 year ago

5 0

I do not agree with the given statement that is "Only variable costs can be differential costs.".

The difference in the costs of two alternative decisions is referred to as differential cost.

When a company is faced with several similar options, it must make a decision by selecting one and discarding the other.

Variable costs in cost accounting are costs that vary according to how much a company produces.

Variable costs are typically proportional to output.

As a result, the cost difference between two alternatives, rather than the fixed and variable nature of costs, is relevant for decision-making.

Hence, I disagree with the statement given in the question.

Learn more about variable cost:

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St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at 100% of normal production capacity. Production w

Ksju [112]

Answer:

$9,000 unfavorable

Explanation:

The computation of the total fixed overhead variance is shown below:

= Actual fixed overhead costs - Budgeted fixed overhead

where,

Budgeted fixed overhead is $360,000

And, the Actual fixed overhead cost is computed below:

= Actual fixed overhead × Actual production ÷ budgeted production

= $360,000 × 11,700 units ÷ 12,000 units

= $351,000

Now put these values to the above formula

So, the value would equal to

= $351,000 - $360,000

= $9,000 unfavorable

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Explanation:

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shusha [124]

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Rus_ich [418]

Answer:

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Explanation:

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