Ted's Manufacturing Makes Two Products, B and C

Multiple Choice

Ted's Manufacturing makes two products, B and C. They each take 2 direct labor hours and 2 machine hours to produce. A batch of Product B, however, uses twice the number of machine set-ups and requires 3 times as many materials requisitions as does Product C. Which of the following is most likely true?

A) The product cost of Product C will be higher under ABC than under traditional costing
B) Traditional costing assigns a product cost that is too low to Product B
C) Traditional costing assigns a product cost that is too low to Product C
D) The product cost of Product B will be higher under ABC than under traditional costing