Which of the following statements is true of a peanut-butter costing system?
A) A peanut-butter costing system typically has more-homogeneous indirect cost pools.
B) A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects.
C) A peanut-butter costing system assumes that all costs are variable.
D) In a peanut-butter costing system, costs of activities are used to assign costs to other cost objects such as products or services based on the activities the products or services consume.

Question

Quizplus · Accepted Answer

A peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects. This is done without much consideration for differences in how or how much the cost objects consume the resources, leading to overcosting of low-consumption cost objects and undercosting of high-consumption cost objects. The other options are not true for a peanut-butter costing system - indirect cost pools may not be homogeneous, the assumption of all costs being variable is not valid, and costs of activities are not necessarily used to assign costs to other cost objects.

Which of the Following Statements Is True of a Peanut-Butter