Vanguilder combines all manufacturing overhead into a single cost pool and allocates this overhead to products by using machine hours. Activity-based costing would likely show that with Vanguard's current procedures that:
A) all of the company's products are undercosted.
B) the company's high-volume products are undercosted.
C) all of the company's products are overcosted.
D) the company's high-volume products are overcosted.
E) the company's low-volume products are overcosted.

Question

Quizplus · Accepted Answer

Activity-based costing often reveals that high-volume products are overcosted because traditional costing methods allocate too much overhead to them, not reflecting the actual resources consumed.

Vanguilder Combines All Manufacturing Overhead into a Single Cost Pool