Which of the following statements is incorrect?
A)Full costs are useful in decision-making, because this approach focuses on future costs.
B)The use of full costs is criticised, because it focuses on past costs.
C)Full costing can lead to incorrect decision-making, because it can distort figures.
D)Actual costs do not always follow the direction that the recovery rate may suggest.

Question

Quizplus · Accepted Answer

Full costs, which include all direct and indirect costs, are not specifically focused on future costs; rather, they aim to allocate all costs of production to the product. Decision-making often requires a focus on relevant costs, which are future costs that will differ among alternatives. Full costing can include both past (historical) and future costs, but its primary critique is not about focusing on future costs but rather on allocating fixed costs that may not be relevant to decision-making.

Which of the Following Statements Is Incorrect