19 Suppose that Arthur, Ltd. produces only two products: X and Y. If the new costing system used by the company reveals that product X was overcosted by its previous costing system, then managers at Arthur, Ltd. can conclude that:

1. The previous system traced too many direct costs to products X and Y
2. The new costing system is an improvement over the previous costing system
3. Product Y was undercosted by the previous costing system
4. Product X was undercosted by the previous costing system

7. Using ________ as the denominator level gives the manager a more accurate idea of the resources needed and used to produce a unit by excluding the cost of unused capacity

1. practical capacity
2. normal capacity
3. theoretical capacity
4. master-budget capacity