Using only unit-based activity drivers to assign nonunit-related overhead costs can cause
A) product diversity.
B) distorted product costs.
C) efficiency.
D) activity sharing.
E) None of these.

Question

Quizplus · Accepted Answer

Using only unit-based activity drivers to assign nonunit-related overhead costs can cause distorted product costs because certain products or activities may bear more overhead costs than they actually consume, while others may bear less. Nonunit-related overhead costs could include batch-level, product-level, or customer-level costs, among others. Therefore, it is important to consider multiple activity drivers when assigning overhead costs to different products or services to obtain accurate product costs.

Using Only Unit-Based Activity Drivers to Assign Nonunit-Related Overhead Costs