Volume-Based Cost Accounting Systems Often Do a Poor Job of Product

question 3

Multiple Choice

Volume-based cost accounting systems often do a poor job of product costing because they:

• A)Use only volume-based cost drivers.
• B)Fail to recognize the impact of overhead in product cost.
• C)Often do not reflect changes in major cost categories caused by plant automation.
• D)Too often use an allocation base that does not have a cause-effect relationship to resource usage.
• E)Product costs involve both fixed and variable costs