If Two Factories Produce the Exact Same Product Having the Same

question 139

Multiple Choice

If two factories produce the exact same product having the same costs, and factory costs are completely allocated to the individual products, the factory operating at 80% capacity (while the other operates at 100% capacity)

• A) would have a lower rate of cost allocation to each unit of production.
• B) would have a higher rate of cost allocation to each unit of production.
• C) would have the same rate of cost allocation to each unit of production as the 100% capacity operation.
• D) would be operating at a loss, because of unused capacity.

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