Traditional Cost Systems with a Single-Allocation Base Tend to Overcost

question 159

True/False

Traditional cost systems with a single-allocation base tend to overcost high-volume products and undercost low-volume products as compared to activity-based costing systems.

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Definitions:

Palsgraf Case

A landmark case in American tort law that established the principle that negligence requires foreseeability of harm to the plaintiff.

Prima Facie

A Latin term meaning "at first sight" or "on its face," referring to evidence that, unless rebutted, is sufficient to prove a particular proposition or fact.

Negligence

A failure to exercise the care that a reasonably prudent person would exercise in similar circumstances.

Reasonable Standard Of Care

The degree of caution and concern an ordinarily prudent and rational person would use in similar circumstances.