Assuming ABC allocated overhead more accurately, which products were incorrectly priced using the traditional costing method? What difficulties might result from incorrectly budgeted products? Hint: Think about how capital resources should be allocated to the most efficient opportunities.
What actions might be explored to deal with the mispriced products?
Compare assigned costs per product under both methods. Why had activity-based costing changed the total costs assigned to each product?
What were two circumstances where traditional and ABC costing would likely yield similar or equal overhead costs?
What were two circumstances where traditional and ABC costing would likely yield similar or equal overhead costs?
