When a Company Changes from a Traditional Cost System in Which

question 82

True/False

When a company changes from a traditional cost system in which manufacturing overhead is applied based on direct labor-hours to an activity-based costing system in which there are batch-level and product-level costs, the unit product costs of high-volume products typically increase whereas the unit product costs of low-volume products typically decrease.

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Definitions:

Mutual Mistake

The result of an error by both parties about a material fact, that is, one that is important in the context of a particular contract.

Legal Consent

The voluntary agreement from a person with full understanding of the facts and implications to participate in a specific legal act, contract, or activity.

Undue Influence

A situation where an individual is able to persuade another's decisions due to the relationship between them, typically where one party is in a position of power over the other.

Dominant Position

A situation where a company or entity has a significant or controlling influence over a market, allowing it to set prices or control the supply of products or services.