A Company That Uses a Traditional Two Stage Cost Allocation

Multiple Choice

A company that uses a traditional two stage cost allocation approach is likely to do the following.

A) Overhead allocations to high volume products will tend to be overstated while overhead allocations to low volume products will tend to be understated.
B) Overhead allocations to high volume products will tend to be understated, while allocations to low volume products will tend to be overstated.
C) Overhead allocations to large products will tend to be understat