Unit-level cost drivers create distortions when
A) products use resources similarly.
B) products are produced using resources homogeneously.
C) different products consume resources differently.
D) all of these.

Question

Quizplus · Accepted Answer

Unit-level cost drivers create distortions when different products consume resources differently. This is because unit-level cost drivers allocate costs based on the assumption that all products use resources equally, which is not the case when there are differences in resource consumption among products. As a result, some products may be overcosted while others are undercosted, leading to distortions in product costs and potentially poor decision-making.

Unit-Level Cost Drivers Create Distortions When