In changing from a traditional costing system to an activity-based costing system, overhead costs tend to shift from high-volume standard products to low-volume premium products because
A)all overhead costs are indirect.
B)premium products usually consume more activities per unit than standard products.
C)standard products use more total activities than premium products.
D)all overhead costs are direct.

Question

Quizplus · Accepted Answer

Activity-based costing system allocates overhead costs based on the activities used to produce each unit. Premium products usually require more activities per unit than standard products, which results in a higher allocation of overhead costs. Therefore, overhead costs tend to shift from high-volume standard products to low-volume premium products.

In Changing from a Traditional Costing System to an Activity-Based