Question
60. A company has 3 product lines and historically utilized the traditional costing system to allocate overhead costs to each product line. Due to significant
60. A company has 3 product lines and historically utilized the traditional costing system to allocate overhead costs to each product line. Due to significant differences in the production processes for the 3 product lines, the company has implemented an activity based costing study and identified the activity based cost for each product
ABC
Tradtional CPU$558$1375$1211
Activity based CPU$485$1585$967
Selling price per unit$650$1450$1300
What decision should be made based on this information?
A The selling price for A and C should increase because the cost per unit was more than the selling price per unit
B The selling price should increase for all 3 products because the cost per unit significantly changed for each product
C The selling price for B should increase because the cost per unit was more than the selling price per unit
D No change should be made to the selling price because the cost per unit did not change significantly for any product
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