When product costs are used for decision-making, what assumption is most likely to distort the decisions?
A) There is a proportionality of overhead costs and output, regardless of whether a product is dropped or not.
B) Some overhead estimates can decrease when a product is dropped.
C) Some overhead costs could be fixed when a product is dropped.
D) The cost accounting system treats all overheads as if it were variable with respect to the allocation base.

Question

Quizplus · Accepted Answer

The Answer of When product costs are used for decision-making, what assumption is most likely to distort the decisions?
A) There is a proportionality of overhead costs and output, regardless of whether a product is dropped or not.
B) Some overhead estimates can decrease when a product is dropped.
C) Some overhead costs could be fixed when a product is dropped.
D) The cost accounting system treats all overheads as if it were variable with respect to the allocation base.

When Product Costs Are Used for Decision-Making, What Assumption Is