A single indirect-cost rate may distort product costs because:
A)there is an assumption that all support activities affect all products
B)it recognizes specific activities that are required to produce a product
C)costs are not consistently recorded
D)it fails to measure the correct amount of total costs

Question

Quizplus · Accepted Answer

A single indirect-cost rate assumes that all support activities affect all products equally, but this is not always the case. Some products may require more support activities than others, leading to distorted product costs. Therefore, a more accurate approach is to use multiple indirect-cost rates that are specific to each product or activity.

A Single Indirect-Cost Rate May Distort Product Costs Because