The shift in the amount of manufacturing overhead costs applied to the mix of products produced that occurs when using a single cost driver rate as compared to using activity-based costing rates is known as:
A) underapplied overhead.
B) overapplied overhead.
C) cost absorption.
D)cost distortion.

Question

Quizplus · Accepted Answer

The shift in the amount of manufacturing overhead costs applied to the mix of products produced is known as cost distortion when using a single cost driver rate as compared to using activity-based costing rates. This is because a single cost driver rate may not accurately reflect the actual resources used by each product, resulting in an incorrect allocation of costs.

The Shift in the Amount of Manufacturing Overhead Costs Applied