As product diversity and indirect costs increased,broad averaging led to inaccurate product costs.

Question

Quizplus · Accepted Answer

Broad averaging, where costs are assigned to products based on an average rate, can lead to inaccurate product costs when there is a high level of product diversity and indirect costs. This is because products with different cost drivers and production processes will have different cost structures that cannot be accurately captured through broad averaging.

As Product Diversity and Indirect Costs Increased,broad Averaging Led to Inaccurate