Dreyfus Manufacturing Sells a Number of Goods Whose Selling Price

question 59

Multiple Choice

Dreyfus 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:

Yields ATP

The process of producing ATP (adenosine triphosphate), the primary energy carrier in all living organisms, typically via cellular respiration or photosynthesis.

NADPH

Nicotinamide adenine dinucleotide phosphate, a coenzyme involved in redox reactions, carrying electrons and hydrogen ions in cellular processes.

Oxygen

A chemical element (O) vital to most life forms on Earth; it's a component of water, many organic compounds, and is required for respiration in aerobic organisms.

Photosynthetic Pathway

The series of biochemical reactions in plants and other photosynthetic organisms that capture and convert light energy into chemical energy, culminating in the production of oxygen and glucose.