Dreyson Manufacturing Sells a Number of Goods Whose Selling Price

question 42

Multiple Choice

Dreyson Manufacturing sells a number of goods whose selling price is heavily influenced by cost. A recent study of product no. 519 revealed a traditionally-derived total cost of $1,019, a selling price of $1,850 based on that figure, and a newly computed activity-based total cost of $1,215. Which of the following statements is true?

• A) All other things being equal, the company should consider a drop in its sales price.
• B) The company may have been extremely competitive in the marketplace from a price perspective.
• C) Product no. 519 could be labeled as being overcosted by the firm's traditional costing procedures.
• D) If product no. 519 is undercosted by traditional accounting procedures, then all of the company's other products must be undercosted as well.
• E) Generally speaking, the activity-based cost figure is "less accurate" than the traditionally-derived cost figure.

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Definitions:

Enterprise Success

The achievement of desired business outcomes, such as profitability, growth, market share, or innovation, by a company or business enterprise.

Soviet Union

A former federal socialist state in the northern Eurasia that existed from 1922 to 1991, composed of multiple republics, with Moscow as its capital.

Quantity of Output

The total amount of goods or services produced by a firm or industry during a specific time period.

Surplus Supply

A situation where the quantity of a good or service supplied in a market exceeds the quantity demanded at the current price.