If product costs are misclassified as selling costs,the average cost per unit will be understated.

Question

Quizplus · Accepted Answer

If product costs, which are costs associated with the production of goods, are misclassified as selling costs, which are costs associated with marketing and distribution of goods, then the product costs are effectively being excluded from the calculation of the average cost per unit. This will lead to an understatement of the average cost per unit, since the actual cost of production is not being included in the calculation.

If Product Costs Are Misclassified as Selling Costs,the Average Cost