Which of the Following Statements Is True Concerning Product Costing

question 64

Multiple Choice

Which of the following statements is true concerning product costing systems?

• A) Companies that undercost products always sell products at a loss.
• B) Companies that overcost run the risk of losing customers.
• C) Undercosting or overcosting does not relate to product cost cross-subsidization.
• D) Peanut butter costing is another term for direct costing.
• E) Companies that overcost will make more profit by passing along higher prices to customers.

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Definitions:

Chi-Square Test

A statistical test used to determine if there is a significant association between two categorical variables.

Expected Cell Counts

Predicted frequencies in cells of a contingency table in statistics, assuming that the null hypothesis is true.

Observed Cell Counts

The actual frequencies or numbers of observations recorded or categorized in each cell of a contingency table in statistical analysis.

Two-Way Table

A tabular method to display the frequency of occurrence of variables that are categorized along two dimensions.