What is the impact of the use of unit-based activity drivers to assign costs?
A)It will overcost low-volume products.
B)It will overcost high-volume products.
C)It will undercost all products.
D)It will overcost all products.

Question

Quizplus · Accepted Answer

Unit-based activity drivers tend to overcost high-volume products because they allocate costs based on the number of units produced, without considering the actual effort or resources each unit requires. This can lead to a disproportionate allocation of overhead costs to high-volume products, making them appear more expensive to produce than they actually are.

What Is the Impact of the Use of Unit-Based Activity