Chastain Company Recently Implemented an Activity-Based Costing System

question 25

Multiple Choice

Chastain Company recently implemented an activity-based costing system.As a result of the ABC allocations,the cost of one of the company's products was determined to be above its current selling price.Due to competition,the company is unable to raise the price of this product.Which of the following options is most reasonable,assuming Chastain employs a target pricing strategy?

• A) Use less expensive materials to make the product.
• B) Raise prices under the assumption that the company's competitors will follow suit.
• C) Target advertising to high-income customers.
• D) Return to the old allocation method, which produces a lower amount of estimated cost.

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Definitions:

Leading Cause

The primary factor or condition that contributes most significantly to a particular outcome or event.

Death

The cessation of all biological functions that sustain a living organism, marking the end of its life.

United States

A country located primarily in North America, comprising 50 states, a federal district, and various territories.

Cancer

A disease characterized by the uncontrolled division and spread of abnormal cells in the body, potentially leading to death if not treated.