Simple cost systems distort product costs because
A)they do not know how to identify the appropriate units.
B)competitive pricing is ignored.
C)they emphasize financial accounting requirements.
D)they apply average support costs to each unit of product.
E)they assign direct costs using direct cost tracing.

Question

Quizplus · Accepted Answer

Simple cost systems apply average support costs to each unit of product and do not trace indirect costs to individual products or activities. Therefore, product costs are distorted as they do not accurately reflect the actual cost of producing a product.

Simple Cost Systems Distort Product Costs Because