Question

In: Accounting

1). costs are costs that are incurred for the production requirements of a certain period. T/F...

1). costs are costs that are incurred for the production requirements of a certain period.
T/F
2) budgetary slack can be avoided if lower and mid level managers are requested to support all of their spending requirements with specific operational plans.
T/F
3) for an automotive repair shop the wages of mechanics would be classified as direct labor cost.
T/F
4) when goods are sold their cost are transferred from work-in-process to finish Goods
T/F

Solutions

Expert Solution

The following statements are true/false :-

1). This statement is false.

Because costs are cost that are incurred for the production requirements as well as incurred for their selling and distribution also.
Their are also of many types of costs which can be associated to a product for example raw material costs, labour costs, and manufacturing costs, administrative costs, other fixed costs, packing costs, selling and distribution costs and there comes sales costs also.
So, in this statement it cannot be said that costs are only costs that are incurred for the production requirements for a certain period.

2). This statement is true.

Budgetary slack is an under-estimation or over estimation of budgeted revenue or budgeted expenses. It is most likely to occur when there is uncertainty about the results to be expected in future. The only chance when budgetary slack is unlikely to occur is when a small number of aggressive managers are allowed input into the budget model. This can be achieved only if lower and Middle level managers are requested to support all of their spending requirements with specific operational plans.

3). This statement is true.

As the wages of mechanics is direct labour cost as the business is an automatic repair shop mechanic course is the only labour cost that can be associated with this business as a mechanic plays a major role in shops like Automotive repairs.

4). This statement is true.

When goods are sold their costs are transferred from work in process to finished goods as goods can only be sold when they gets converted into finished goods,s with that their costs are also transferred to finished goods.As when the goods were not ready they were in work in process with that their costs were also associated with work in process.

ekkarill92 answered 7 months ago
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