Which of the following statements regarding differential costs is (are)true? (A)The full cost fallacy occurs when a decision-maker includes fixed manufacturing overhead in the product's cost.
(B)When deciding whether or not to accept a special order,a decision-maker should focus on differential costs instead of full costs.
A)Only A.
B)Only B.
C)Neither A nor B is false.
D)Both A and B are true.

Question

Quizplus · Accepted Answer

Differential costs are relevant for decision-making. Statement A is true because including fixed costs in decision-making can lead to incorrect conclusions. Statement B is true because focusing on differential costs helps in evaluating the impact of the special order.

Which of the Following Statements Regarding Differential Costs Is (Are)true