Cost distortion occurs when the some products are overcosted while other products are undercosted by the cost allocation system.

Question

Quizplus · Accepted Answer

Cost distortion occurs when the cost allocation system assigns more costs to certain products or services, resulting in overcosting, while other products or services are assigned fewer costs, resulting in undercosting. This can lead to inaccurate product pricing decisions and ultimately, a loss of competitiveness in the market.

Cost Distortion Occurs When the Some Products Are Overcosted While