Author Question: The matching concept a. addresses the relationship between the journal and the balance sheet. b. ... (Read 33 times)

dbose · **on:** Jul 5, 2018

The matching concept
a. addresses the relationship between the journal and the balance sheet.
b. determines whether the normal balance of an account is a debit or credit.
c. requires that the dollar amount of debits equal the dollar amount of credits on a trial balance.
d. states that the revenues and related expenses should be reported in the same period.

Question 2

Is it advisable to ignore facility-sustaining cost drivers during product costing?

What will be an ideal response?

rleezy04 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

d

Answer to Question 2

Answer: Facility-sustaining cost drivers are ignored only when it is difficult to find a good cause-and-effect relationship between these costs and the cost-allocation base. So, some companies deduct facility-sustaining costs as a separate lump-sum amount from operating income rather than allocate them to products. Managers who follow this approach need to keep in mind that when making decisions based on costs (such as pricing), some lump-sum costs have not been allocated. They must set prices that are much greater than the allocated costs to recover some of the unallocated facility-sustaining costs. Allocating all costs to products or services ensures that managers have taken into account all costs when making decisions based on costs.