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.
-Given this change in the cost ________.
A) SR6 will now command a higher sales price
B) SR6 has benefited from the new system
C) SR6 is definitely more accurately costed
D) the costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system

Question

Quizplus · Accepted Answer

The costing results for SR6 under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system. While the new cost of SR6 increased, it is not clear whether this will lead to a higher sales price or if SR6 has definitively benefited from the new system. Therefore, option D is the best choice.

Answer the Following Questions Using the Information Below