When a Company Changes from a Traditional Costing System to an Activity-Based

question 110

True/False

When a company changes from a traditional costing system to an activity-based costing system, the unit product costs of low-volume products typically change more than the unit product costs of high-volume products.

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Definitions:

Current Liability

Financial obligations a company owes and is expected to pay within a year.

Long-term Liability

A debt or obligation not due within the current accounting year, requiring repayment over a longer period.

Warranty Repairs

Services provided to repair or fix products free of charge under a warranty agreement, considered a contingent liability when the product is sold.

Parts Inventory

The stock of components or parts kept on hand by a company to assemble products or perform service maintenance.