Which of the following is likely to occur when fewer overhead cost pools are used?
A)Product costs will be less accurate.
B)Recordkeeping will be more expensive.
C)Decisions such as product pricing will be improved.
D)All products will be undercosted.

Question

Quizplus · Accepted Answer

When fewer overhead cost pools are used, overhead costs are allocated over a smaller number of cost pools, which decreases the accuracy of product costing. This is because the allocation of overhead costs to products becomes more arbitrary and can result in products being over- or undercosted.

Which of the Following Is Likely to Occur When Fewer