If a firm uses a traditional volume-based product costing system low-volume and complex products are likely to be overcosted.

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Quizplus · Accepted Answer

In a traditional volume-based product costing system, it's typically the high-volume, simple products that are overcosted, while low-volume, complex products are undercosted. This is because traditional costing tends to allocate overhead costs based on volume measures (like labor hours or machine hours), not taking into account the additional complexity and non-volume related activities that might cause certain products to consume more overhead resources.

If a Firm Uses a Traditional Volume-Based Product Costing System