Answer (D) is correct . Unit costs should be used with extreme care. In each situation, they may be calculated based on a different volume level from that anticipated, so comparability may be lost. Irrelevant costs included in the unit cost should be disregarded; only relevant costs should be included in the analysis. Allocated costs should also be ignored, and only the relevant costs that will change with the option chosen should be considered.
Answer (A) is incorrect because Reasons favoring total costs are that unit cost may be calculated based on different volumes and that allocated costs and irrelevant costs may be included in the unit amounts.
Answer (B) is incorrect because Reasons favoring total costs are that unit cost may be calculated based on different volumes and that allocated costs and irrelevant costs may be included in the unit amounts.
Answer (C) is incorrect because Reasons favoring total costs are that unit cost may be calculated based on different volumes and that allocated costs and irrelevant costs may be included in the unit amounts.
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