Multiple Choice
Assume that a company produces two products in a manufacturing plant. One is a low volume specialty product that is produced on a demand pull basis, while the other is a high volume product that is produced on a push basis for inventory. A production volume based cost allocation system would tend to
A) Accurately reflect the product cost of the two products.
B) Overstate the product cost of the low volume product.
C) Understate the product cost of the low volume product.
D) Overstate the product cost of both products.
Correct Answer:
Verified
Correct Answer:
Verified
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