Which of the following is/are examples of incorrect use(s)of accounting data by decision makers?
A)Reliance on data that include cost allocations.
B)Reliance on cost information produced by the full-absorption method of product costing,which allocates fixed manufacturing costs to units produced by manufacturing companies.
C)Reliance on full-absorption unit costs for short-run decision making.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

All of the answers are examples of incorrect use of accounting data by decision makers.

A) Reliance on data that include cost allocations can lead to distortion of actual costs and misinformed decisions. 
B) Full-absorption method of product costing allocates fixed manufacturing costs to units produced, which distorts the actual costs of production and can lead to incorrect pricing and profitability analysis. 
C) Reliance on full-absorption unit costs for short-run decision making is not appropriate because fixed costs are not relevant in the short run and can lead to incorrect decisions.

Which of the Following Is/are Examples of Incorrect Use(s)of Accounting