Simple Cost Systems Distort Product Costs Because

question 50

Multiple Choice

Simple cost systems distort product costs because

• A)they do not know how to identify the appropriate units.
• B)competitive pricing is ignored.
• C)they emphasize financial accounting requirements.
• D)they apply average support costs to each unit of product.
• E)they assign direct costs using direct cost tracing.

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Definitions:

Worker's Tools

Equipment and tools that are required and used by a worker to perform their job.

Administrative Facilities

Infrastructure and buildings utilized by an organization to support its administrative functions, including offices, headquarters, and other operational spaces.

Insurance Expired

The portion of an insurance premium that applies to the elapsed part of the policy period, representing the cost of coverage that has already been provided.

Indirect

Costs that cannot be directly traced to a specific product or service, such as overhead expenses in manufacturing.