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Under the concept of cross-subsidization, is product B over or under-costed by the traditional costing method, and by how much? 7. A company produces and

Under the concept of cross-subsidization, is product B over or under-costed by the traditional costing method, and by how much? image text in transcribed
7. A company produces and sells two products. Recently, product A, which the company has made successfully for a long time, has seen a downturn in market demand while product B, a relatively new addition to the company, seems to be quite profitable, and sales are higher than predicted. The company traditionally has used machine hours to allocate indirect product costs, but because of the unexpected demand patterns for the two products, the company has analyzed its indirect cost pools and identified six activity pools. Cost and driver information for these activity pools is as follows

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