Misleading cost numbers are larger when unit-level assignments and the alternative activity-cost-driver assignments are proportionately dissimilar to each other.

Question

Quizplus · Accepted Answer

When the unit-level assignments and the alternative activity-cost-driver assignments are proportionately dissimilar to each other, the cost numbers can be misleading and larger. This is because the cost is being allocated to activities that may not necessarily reflect the actual resources used by the product or service, leading to over- or under-estimation of costs.

Misleading Cost Numbers Are Larger When Unit-Level Assignments and the Alternative