Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied...
Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?
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Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a genera and administrative expense on the income statement.
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Product costs may be inaccurate because support department services may be used more heavily by some products than others.
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Product costs may be inaccurate because incorrect cost drivers are used.
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Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in thu product costing system.
Homework Answers
Solution:
Misguide about approach of considering support department costs to be facility-level costs is "Product costs may be inaccurate because support department services may be used more heavily by some products than others."
Hence 2nd option is correct.
Add Answer to:
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