Which of the following statements concerning ease of adjustment codes is incorrect
A)'Green' costs adjust automatically to changes in activity.
B)'Yellow' costs could be adjusted to changes in activity, but such adjustments require management action; the adjustment is not automatic.
C)'Red' costs cannot be adjusted to changes in activity.
D)The costs of idle capacity and organisation-sustaining costs are not assigned codes.

Question

Quizplus · Accepted Answer

The statement that "Red" costs cannot be adjusted to changes in activity is incorrect. "Red" costs are costs that cannot be adjusted in the short term, but they can still be adjusted in the long term through management action, such as renegotiating leases or altering the production process.

Which of the Following Statements Concerning Ease of Adjustment Codes