Please describe the constraints on modeling the way costs behave (in managerial cost framework).

Solutions

Expert Solution

Majorly there are five constraints on modeling the way costs behave in managerial cost framework:

1.Objectivity: The main theme of objectivity is that the basis on which managerial costing information is selected should be unbiased, The information selected should be from an independent source.

2.Verifiability: The main objective of verifiability is to design the model framework such that the readers of such information arrives at a similiar kind of conclusions.

3.Measurability: This measurability constraint demands the model framework to create model with better relationships that are measurable with some reasonable amount of work.

4.Materiality: This materiality constraint highlights the fact that the benefits that are going to accrue by designing this model should necessarily be higher than the cost that has been spent for implementation of model.

5.Accuracy: Accuracy deals with the objective that to what extent the model is able to display better results that are intended by the user, it should not be vague.

ekkarill92 answered 8 months ago

Next > < Previous

Related Solutions

(TCO 2) Please describe the way pension cost is derived by FASB. Please describe what is...

(TCO 2) Please describe the way pension cost is derived by FASB. Please describe what is meant by over or under funded pension plan. If a plan is overfunded, what kind of account is it.. If underfunded? Determine if the following plan is over or under funded Jakes Hammer. has the following information related to its defined benefit pension plan: December 31, Year 1 Projected benefit obligation $1,800,000 Fair value of plan assets 1,600,000 Unrecognized prior service cost 200,000 Unrecognized...

MANAGERIAL ACCOUTING 1. Overhead costs actually incurred in production are recorded in such a way to:...

MANAGERIAL ACCOUTING 1. Overhead costs actually incurred in production are recorded in such a way to: A. Increase Work-in-process B. Decrease Work-in-process c. Increase Manufacturing Overhead d. Decrease Manufacturing Overhead 2. A product, which cost $100 in manufacturing, has been sold for $120 for cash. For this transaction, which of the following is a correct accounting treatment? A. Increase Cost of goods sold by $120 B. Decrease Sales revenue by $120 C. Decrease Finished goods by $100 d....

Describe two examples of how LP (Linear Programming) modeling can be applied to solve real-word managerial...

Describe two examples of how LP (Linear Programming) modeling can be applied to solve real-word managerial decision problems. What are some of the items you need to identify in order to formulate an LP model? How would you measure the effectiveness of LP modeling in managerial decision making in an organization?

As production volume increases, describe how variable costs "behave”: (a) on a total basis and (b)...

As production volume increases, describe how variable costs "behave”: (a) on a total basis and (b) on a per unit basis. Explain. (2pts each) As production volume increases, describe how fixed costs "behave"”: (a) on a total basis and (b) on a per unit basis. Explain. (2pts each) Lickety-Split makes pints of ice cream sold by major retailers. Identify each of the following costs as variable (V) or fixed (F), relative to the number of pints of ice cream produced....

Draft a project scope statement for the TIMS system and describe the constraints. Please be specific....

Draft a project scope statement for the TIMS system and describe the constraints. Please be specific. Use Microsoft Office Word to write your project scope statement. Submit the Microsoft Office Word document in this drop box as an attachment

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of...

In a Cost-of-Quality (COQ) reporting framework, costs incurred in conjunction with the measurement and analysis of data to ascertain conformity of products and services to specification are properly classified as: External failure costs Appraisal costs. Internal failure costs .Prevention costs. Value-added costs. Costs incurred because of poor quality found through appraisal prior to delivery of the product to the customer are, in a Cost-of-Quality (COQ) reporting framework, considered: External failure costs. Appraisal costs. Prevention costs. Internal failure costs. Conformity costs.

Question