If a Costing System Uses a Single Base to Allocate

question 18

Multiple Choice

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

• A)Products that use relatively more of this base tend to be undercosted.
• B)Products that use relatively less of this base tend to be overcosted.
• C)Products that use relatively more of this base tend to be overcosted.
• D)Products may be over- or under-costed, depending on the activity level.
• E)Products may be over- or under-costed, depending on the overhead rate.

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Definitions:

Expansion Valve

Restricts the flow of the refrigerant in an A/C circuit, which lowers its pressure as it exits the valve.

High-Pressure

Refers to a condition or system operating at a pressure significantly above atmospheric pressure, often used in hydraulic and pneumatic applications.

Low-Pressure

Refers to a condition or an area where the pressure is lower than the surrounding atmosphere or in comparison to a specified reference.

Liquids Evaporate

The process by which liquid substances transform into gas, usually as a result of heating or being exposed to air.