Chapter 2 An Introduction to Cost Terms and Purposes

4) An efficient management accounting system traces direct costs and allocates indirect costs to products.

5) Management accountants help managers identify what information is relevant and what information is

irrelevant that help in decision making.

6) When making strategic decisions about which products and how much to produce, managers must need to distinguish fixed costs from variable costs.

7) A company is considering buying a product at $15 per unit, the in-house manufacturing of the same product is $17. The fixed cost per unit is $3 is included in the $17 in-house product manufacturing cost. What should the company do in this scenario?