Consider the following statements:
I. Product diversity creates costing problems because diverse products tend to utilize manufacturing activities in different ways.
II. Overhead costs that are not incurred at the unit level create costing problems because such costs do not vary with traditional application bases such as direct labor hours or machine hours.
III. Product diversity typically exists when a single product (e.g., a ballpoint pen) is made in different colors.
Which of the above statements is (are) true?
A) I only.
B) II only.
C) I and II.
D) I and III.
E) II and III.

Question

Quizplus · Accepted Answer

I and II are true because product diversity does indeed create costing problems due to the varied use of manufacturing activities by different products, and overhead costs not incurred at the unit level (which do not vary with traditional bases like direct labor or machine hours) also present costing challenges. Statement III is incorrect because product diversity refers to more than just variations in color; it involves differences in product types, sizes, complexities, etc., which can significantly impact the cost structure.

Consider the Following Statements