Question

Which one of the following is not one of the major reasons for a manager to understand cost behavior? A. Useful for evaluating divisional performance B. Useful for implementing flexible budgeting C. Useful for writing a report to shareholders D. Useful for conducting break-even and contribution margin analysis

Answer 1

Answer:

The answer is option C) Useful for writing a report to shareholders is NOT one of the major reasons for a manager to understand cost behavior.

Explanation:

Cost behavior is observed by the manager to evaluate the changes in cost due to changes in level of output within the organization.

Analyzing cost behavior

• Useful for evaluating divisional performance
• Useful for implementing flexible budgeting
• Useful for conducting break-even and contribution margin analysis

It important for managerial decision making purpose and helps managers would be able to reduce total cost incurred on activities.

Answer 2

Answer:

C. Useful for writing a report to the shareholders

Explanation:

Based on the scenario being explained in the question, it safe to say that cost behavior is not among the major reasons" useful for writing a report to the shareholders.

Cost behavior can be define as an indicator that shows how a cost will change totally when there is a change in some activity. We have three types of cost behavior that are usually discussed in managerial accounting and cost accounting these are;

1.Variable costs

2. Fixed costs

3. Mixed or Semivariablecosts.

All the other option shows a major reason why a manager understands cost behavior except useful for writing a report to the shareholders which is option C.