Question
XYE is in the process of evaluating different costing system What will occur if a company bases overhead allocation solely on volume? Select one: a.
XYE is in the process of evaluating different costing system What will occur if a company bases overhead allocation solely on volume?
Select one:
a.
High-volume products will be overcosted and low-volume products will be undercosted
b.
It is irrelevant because this is the sole basis of the activity-based costing model.
c.High-volume products will be undercosted and low-volume products will be overcosted.
d.
All of the above are correct.
There are two approaches to allocate overhead to products, traditional and activity based costing. In comparison with a traditional system that uses a single, volume-based cost driver, an activity-based costing system is preferred when a company has:
Select one:
a.a large proportion of nonunit-level activities.
b.a large proportion of nonunit-level activities and product-line diversity
c.existing variances from budgeted amounts.
d.product-line diversity.
e.minimal product-line diversity and a small proportion of nonunit-level activities.
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