When Switching from a Traditional Costing System to an Activity-Based

question 217

Multiple Choice

When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs:

• A) the unit product costs of both high and low volume products typically increase.
• B) the unit product costs of both high and low volume products typically decrease.
• C) the unit product costs of high volume products typically increase and the unit product costs of low volume products typically decrease.
• D) the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase.

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Definitions:

Labor Contract

The formal, written document that spells out the relationship between the union and management for a specified period of time—usually two or three years.

Management

A process designed to achieve an organization's objectives by using its resources effectively and efficiently in a changing environment.