Widely varying consumption ratios:
A)are reﬂective of product-line diversity.
B)indicate an out-of-control production environment.
C)dictate a need for traditional costing systems.
D)work against the implementation of activity-based costing.
E)create an unsolvable product-costing problem.

Question

Quizplus · Accepted Answer

Widely varying consumption ratios can occur in instances of product-line diversity, as different products may require different amounts of resources and materials. This is not necessarily indicative of an out-of-control production environment, nor does it require traditional costing systems or work against activity-based costing. It may, however, create challenges for determining accurate product costs.

Widely Varying Consumption Ratios