Contribution margin is the difference between sales revenue and fixed costs.

In make-or-buy decisions, fixed costs are always considered relevant.

The primary goal of outsourcing is to achieve cost savings and operational efficiency.

Outsourcing can reduce management's control over product quality.

Budget variances can indicate either inefficiencies or unexpected changes in business conditions.

Adverse labor efficiency variance suggests that less time was spent on production than expected.

Overproduction often leads to adverse material usage variances.

In TQM, allowances for defects contradict the philosophy of 'zero defects.'

Profit centers are accountable for both revenues and costs but not investments.

Investment centers focus on return on investment and asset utilization.

Overhead absorption rates are determined based on estimated activity levels.

Under-absorbed overhead occurs when actual overhead costs exceed absorbed overhead costs.

Marginal costing ignores fixed costs in profit planning.

Standard costing provides a benchmark for evaluating actual performance.

Idle time is always considered a controllable cost.

Higher inventory levels often lead to increased holding costs.

Throughput accounting focuses on maximizing output and minimizing inventory.

Bottleneck resources determine the capacity of the entire production process.

A key feature of just-in-time (JIT) systems is minimizing work-in-progress inventory.

Value-added activities in ABC are those that directly contribute to customer satisfaction.

In decision-making, relevant costs must differ between alternatives.

Avoidable costs are irrelevant for decision-making.

Opportunity cost is the value of the best alternative foregone.

Economic order quantity (EOQ) minimizes the total cost of ordering and holding inventory.

Sunk costs should be ignored in decision-making processes.

Absorption costing allocates fixed costs to products based on activity levels.

Activity-based budgeting identifies costs by analyzing resource consumption of activities.

Incremental budgeting can perpetuate inefficiencies from previous budgets.

Zero-based budgeting is more time-consuming than incremental budgeting.

Kaizen costing focuses on continuous cost reduction throughout the product's lifecycle.

The learning curve predicts that as cumulative production doubles, unit costs decrease at a constant rate.

Target costing is most effective when introduced during the design phase.

Predetermined overhead rates are calculated based on past data and future forecasts.

A flexible budget adjusts for actual activity levels during the reporting period.

Sensitivity analysis examines how changes in input variables impact outcomes.

Scenario analysis considers multiple possible future states of the business environment.

Decision trees are used to evaluate the expected value of different choices under uncertainty.

Overhead costs in activity-based costing are traced directly to products.

The primary purpose of budgets is to provide control and accountability in organizations.

Responsibility accounting assigns costs to managers based on their control over expenses.

Performance evaluation systems should align with organizational goals and objectives.

Ethical considerations are irrelevant in setting performance targets.

In lifecycle costing, post-sale costs are irrelevant for decision-making.

Relevant costing ignores fixed costs entirely in decision-making.

Sales volume variances measure differences in the actual and budgeted number of units sold.

The margin of safety is the difference between actual sales and break-even sales.

Cost control focuses on reducing expenses without compromising quality.

Benchmarking involves comparing performance metrics with industry standards.

Efficiency variances measure how well resources are utilized.

Variance analysis only applies to financial data.

Total cost of ownership includes acquisition costs, operating costs, and disposal costs.

Depreciation expenses are always included in cash flow analysis.