The practice of assigning the costs of idle capacity to products can result in unstable unit product costs.

Question

Quizplus · Accepted Answer

Assigning the costs of idle capacity to products can result in unstable unit product costs because the amount of idle capacity can vary over time, causing the cost assigned to products to fluctuate. This can make it difficult to accurately calculate the cost of goods sold and accurately price products.

The Practice of Assigning the Costs of Idle Capacity to Products