Question

1: In segmenting the reporting of a company, it would be appropriate to create divisions organized by:

Select one:

A. Product type

B. Geographical area

C. Manufacturing process

D. Target customers

E. All of the above

2- Which of the following statements best explains the concept of "relevant range"?

Select one:

A. All costs behave in the same manner, regardless of the level of production.

B. Management focuses mainly on how costs behave within the levels of production that are reasonably likely to occur.

C. Over a large enough range of production, all costs are generally considered fixed.

D. Over a small enough range of production, all costs are generally considered variable.

E. All of the above

Answer 1

1.

Option E is correct.

Segment report can be created by target customer/ type of product, Manufacturing process or Geographical area.

2.

Option B is correct.

For example a fixed cost is likely to remain fixed only within a relevant range of activity otherwise it will change. Therefore Management focuses mainly on how costs behave within the levels of production that are reasonably likely to occur.