Flavorful Manufacturing Sells a Number of Goods Whose Selling Price

question 23

Multiple Choice

Flavorful Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 519 revealed a traditionally-derived total cost of $1,019, a selling price of $1,850 based on that figure, and a newly computed activity-based total cost of $1,215. Which of the following statements is true?

• A) All other things being equal, the company should consider a drop in its sales price.
• B) The company may have been extremely competitive in the marketplace from a price perspective.
• C) Product no. 519 could be labeled as being overcosted by the firm's traditional costing procedures.
• D) If product no. 519 is undercosted by traditional accounting procedures, then all of the company's other products must be undercosted as well.
• E) Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.

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Definitions:

Leader Substitutes Theory

A theory suggesting that certain characteristics of the situation or the followers can diminish or replace the need for leadership.

Hierarchical Leadership

A leadership structure where decision-making and authority flow from the top down, within clearly defined ranks and positions.

Capable Substitutes

Effective alternatives or replacements that possess the necessary skills or attributes to fulfill a specific role or task.

Managers

are individuals responsible for planning, directing, and overseeing the operations and employees within an organization, ensuring that goals and objectives are achieved efficiently.