Airco Company Is Tempted to Consider Support Department Costs to Be

question 9

Multiple Choice

Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?

• A)Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in the product costing system.
• B)Product costs may be inaccurate because incorrect cost drivers are used.
• C)Product costs may be inaccurate because support department services may be used more heavily by some products than others.
• D)Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a general and administrative expense on the income statement.

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