Which of the following statements about product-cost distortions and product pricing is/are true?
i. Under traditional volume-based product costing systems, high volume and relatively simple products are often overcosted while low volume and complex products are undercosted.
ii. The use of a traditional volume-based product costing system may result in significant cost distortions among product lines.
iii. Overpricing high-volume products can lead to pricing errors.

Question

Quizplus · Accepted Answer

All of the given statements are true. Traditional volume-based product costing systems can lead to distortions in product costs, with some products being overcosted and others being undercosted. This can result in errors in product pricing, as overpricing high-volume products can lead to lost sales and underpricing low-volume products can lead to missed profit opportunities. Therefore, it is important for companies to consider using more accurate costing methods, such as activity-based costing, to minimize these distortions and make more informed pricing decisions.

Which of the Following Statements About Product-Cost Distortions and Product