The change in the amount of manufacturing overhead costs applied to a company's mix of products that are produced when using a single cost driver rate as compared to using activity-based cost driver rates is known as:
A)under/over applied overhead.
B)cost dysfunction.
C)cost absorption.
D)cost distortion.

Question

Quizplus · Accepted Answer

Cost distortion occurs when a single cost driver rate inaccurately allocates overhead costs across products, leading to some products being over-costed and others under-costed compared to using activity-based costing.

The Change in the Amount of Manufacturing Overhead Costs Applied