Traditional cost systems distort product costs because:
A)they do not know how to identify the appropriate units
B)competitive pricing is ignored
C)they emphasize financial accounting requirements
D)they apply average support costs to each unit of product

Question

Quizplus · Accepted Answer

Traditional cost systems typically apply average support costs to each unit of product rather than identifying the actual cost drivers for each unit. This can lead to a distortion of product costs as some products may consume more support resources than others, but all products are allocated the same average cost. This can result in overpricing for some products and underpricing for others.

Traditional Cost Systems Distort Product Costs Because