Assigning overhead using ABC will usually
A) decrease the cost per unit for low volume products as compared to a traditional overhead allocation.
B) increase the cost per unit for low volume products as compared to a traditional overhead allocation.
C) provide less accurate cost per unit for low volume products than will traditional costing.
D) result in the same cost per unit for low volume products as does traditional costing.

Question

Quizplus · Accepted Answer

ABC assigns overhead costs based on activities, which can result in different cost per unit for low volume products as compared to traditional overhead allocation. This is because in traditional costing, overhead costs are spread uniformly across all units whereas in ABC, overhead costs are allocated based on activities which can differ for high and low volume products.

Assigning Overhead Using ABC Will Usually