A volume-based cost system is likely to assign more manufacturing overhead costs to products:
A)that are more complex or difficult to manufacture than others.
B)that sell more units than others.
C)with higher per-unit materials costs than others.
D)with more activity costs than others.

Question

Quizplus · Accepted Answer

A volume-based cost system assigns manufacturing overhead costs based on a predetermined overhead rate, which is usually calculated as a percentage of direct labor or machine hours. Therefore, products that sell more units are likely to be assigned more manufacturing overhead costs because they require more machine or labor hours to produce. The other choices may affect the cost of production, but they are not directly related to the allocation of manufacturing overhead costs in a volume-based cost system.

A Volume-Based Cost System Is Likely to Assign More Manufacturing