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QUESTION THREE a) By drawing on the differences between them, discuss the 'direct' and 'step' methods of overhead cost allocation. Which method, in your opinion,
QUESTION THREE a) By drawing on the differences between them, discuss the 'direct' and 'step' methods of overhead cost allocation. Which method, in your opinion, better accounts for overhead allocation and why? (10 marks) b) What is operating leverage? How can a high degree of operating leverage be risky for a company? Provide example(s) in support of your answer. (15 marks) c) Discuss i) relevant cost, ii) irrelevant cost, and iii) sunk cost in the context of decision- making. Provide example(s) to support your explanations. (15 marks) [TOTAL: 40 MARKS]
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