Consider the following statements regarding traditional costing systems:
I. Overhead costs are applied to products on the basis of volume-related measures.
II. All manufacturing costs are easily traceable to the goods produced.
III. Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.
Which of the above statements is (are) true?
A) I only.
B) II only.
C) III only.
D) I and III.
E) II and III.

Question

Quizplus · Accepted Answer

Traditional costing systems apply overhead costs based on volume-related measures (I) and can distort unit manufacturing costs when products have varying production requirements (III). Not all manufacturing costs are easily traceable to goods produced, which makes statement II false.

Consider the Following Statements Regarding Traditional Costing Systems