Conventional product costing systems result in inaccurate product costs when:
A) direct labour increases
B) the proportion of direct labour and raw material increases
C) product diversity increases
D) the proportion of direct labour and raw material increases AND product diversity increases

Question

Quizplus · Accepted Answer

Conventional costing systems often allocate overhead based on direct labor or material costs, which can lead to inaccuracies when product diversity increases, as different products may consume overhead resources differently.

Conventional Product Costing Systems Result in Inaccurate Product Costs When