In calculating product costs for a value stream with multiple products, average product costs are a good estimate of individual product costs if
A)the products are similar and consume resources in approximately the same proportion.
B)the product mix is relatively stable.
C)the products are homogenous.
D)all of the above.

Question

Quizplus · Accepted Answer

Average product costs are a good estimate of individual product costs only if the products are similar and consume resources in approximately the same proportion, and the product mix is stable. Moreover, the products should be homogeneous to get an accurate estimate of individual product costs. Therefore, all of the above factors must be considered to use average product costs as a good estimate of individual product costs in a value stream with multiple products.

In Calculating Product Costs for a Value Stream with Multiple