Product-cost cross-subsidization means that:
A) when one product is overcosted, it results in more than one other product being overcosted
B) when a company undercosts more than one of its products, it will overcost more than one of its other products
C) when a company undercosts one of its products, it will overcost at least one of its other products
D) when one product is overcosted it results in all other products being overcosted

Question

Quizplus · Accepted Answer

Product-cost cross-subsidization occurs when a company undercosts one of its products, resulting in it overcosting at least one of its other products. This happens because the undercosted product is not fully absorbing its fair share of overhead costs, and these costs get shifted to other products, causing them to be overcosted.

Product-Cost Cross-Subsidization Means That