In calculating product costs for a value stream with multiple products,when would average product costs be a good estimate of individual product costs?
A)when the products are similar and consume resources in approximately the same proportion
B)when the product mix is relatively unstable
C)when the products are very different in size,style,and production
D)when the products consume labour at different rates

Question

Quizplus · Accepted Answer

Average product costs would be a good estimate of individual product costs when the products are similar and consume resources in approximately the same proportion. This is because the average cost would represent the cost per unit of the value stream, which could be applied to all products without significant variance.

In Calculating Product Costs for a Value Stream with Multiple