Johnson Manufactures Products X and Y, Applying Overhead on the Basis

question 11

Multiple Choice

Johnson manufactures products X and Y, applying overhead on the basis of labor hours. X is a high-volume product and relatively simplistic in nature. Y is both a low-volume product and requires a variety of complex manufacturing procedures. What would an activity-based costing system likely disclose about products X and Y as a result of Johnson's current accounting procedures? $\begin{array}{lll}&X&Y\\\text { A. } & \text { Undercosted } & \text { Undercosted } \\\text { B. } & \text { Undercosted } & \text { Overcosted } \\\text { C. } & \text { Overcosted } & \text { Undercosted } \\\text { D. }&\text { Overcosted } & \text { Overcosted } \\\text { E. } & \text { Costed correctly } & \text { Costed correctly }\end{array}$

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D
• E) Choice E

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Definitions:

Purge

The act of removing or getting rid of something or someone decisively.

Tickler File

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Chronological Record

A recording or documentation arranged in the order of time when events occurred.