With simple costing systems, products manufactured in small batches and in small annual volumes may be ________ because batch-related and product-sustaining costs are assigned using unit-related drivers.
A)overcosted
B)fairly costed
C)costed the same as in activity-based costing
D)undercosted
E)ignored

Question

Quizplus · Accepted Answer

With simple costing systems, small-batch and small-volume products are often undercosted because batch-related and product-sustaining costs are assigned using unit-related drivers, which results in a lower cost per unit. This is because the fixed costs are spread over a smaller production run, resulting in a lower cost per unit.

With Simple Costing Systems, Products Manufactured in Small Batches and in Small