One should always be wary of using unit costs for decision-making, because unit costs:
A)disguise the true nature of how costs vary with production
B)can be multiplied by a different number of units, suggesting that the cost data is scalable
C)generate misleading results when the company faces an increasing cost curve
D)ignore step-fixed costs
E)all of the above

Question

Quizplus · Accepted Answer

All of the options listed are reasons why one should be wary of using unit costs for decision-making. Unit costs can disguise the true nature of how costs vary with production, and can be easily manipulated by multiplying them by a different number of units. They can generate misleading results when the company faces an increasing cost curve and they ignore step-fixed costs. Therefore, it is important to carefully consider all aspects of cost when making decisions, rather than relying solely on unit costs.

One Should Always Be Wary of Using Unit Costs for Decision-Making