Question
BigCo manufactures only two products (Product A and Product B) and uses an ABC system to allocate overhead costs. In the year ahead, BigCo expects
BigCo manufactures only two products (Product A and Product B) and uses an ABC system to allocate overhead costs. In the year ahead, BigCo expects to make 50,000 units of Product A and 50,000 units of Product B. If Product As manufacturing operation is significantly more complicated than Product Bs, which of the following characteristics would you expect to observe within BigCos costing system?
A : Product A will account for a lower percentage of BigCos total overhead costs than Product B.
B : Product As per-unit overhead costs will be lower than Product Bs.
C : Product A will be associated with a greater number of cost drivers than Product B.
D : Product A will be associated with fewer activity cost pools than Product B.
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