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Explain how traditional cost systems distort costs

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Explain how traditional cost systems, using a single unit-level cost rate, may distort product costs.

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Solution Summary

Your tutorial is 107 words plus a schedule of overhead activity to show how disproportionate use of resources cannot be well managed with one cost driver.

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Traditional costing systems use only one measure of activity to charge overhead costs to products or divisions. However, the product or division may not use all the resources in the proportion of that single measure. For example, ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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