A traditional costing system would be appropriate if a company ________.
A)manufactures hundreds of different products
B)has complex production operations
C)manufactures simple and complicated products
D)has a plausible and reliable relationship between a single cost driver and all the indirect resource costs being allocated

Question

Quizplus · Accepted Answer

A traditional costing system works best when there is a plausible and reliable relationship between a single cost driver and all the indirect resource costs being allocated. This means that the cost driver accurately reflects the consumption of resources by the product or activity. If a company has complex production operations or manufactures hundreds of different products, it may be difficult to identify a single cost driver that accurately reflects the consumption of resources, making a traditional costing system less appropriate. However, if the company manufactures simple and complicated products and can accurately identify a single cost driver, a traditional costing system can be effective.

A Traditional Costing System Would Be Appropriate If a Company