Answer the following questions using the information below:
Cannady produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit.
-The total amount of indirect costs assigned to product SR6 using the traditional method is ________ the total amount assigned using ABC.
A) more than
B) less than
C) equal to
D) more accurate than

Question

Quizplus · Accepted Answer

The new ABC system uses three cost drivers to allocate indirect costs, which provides a more detailed and accurate allocation compared to the traditional system using only one cost driver. Therefore, the total amount of indirect costs assigned to product SR6 using ABC is likely to be more than the total amount assigned using the traditional method.

Answer the Following Questions Using the Information Below