Cost distortion usually exists in the supplier's pricing of products when the supplier sells a low variety of products and applies overhead equally per unit.

Question

Quizplus · Accepted Answer

Cost distortion is more likely to occur when a supplier sells a high variety of products but applies overhead costs uniformly across products, rather than when selling a low variety of products. This is because different products consume resources at different rates, and applying overhead equally can misrepresent the actual cost of producing each product.

Cost Distortion Usually Exists in the Supplier's Pricing of Products