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    Traditional Cost Systems

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    The following applies to both parts:

    A company produces six products. Under their traditional cost system using one cost driver, SR6 costs $168.00 per unit. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of SR6 was determined to be $178.00 per unit.

    1) Given this change in the cost,

    SR6's costing results under the new system depend on the adequacy and quality of estimated cost drivers and costs used by the system, SR6 will now command a higher sales price, SR6 has benefited from the new system, or SR6 is definitely more accurately costed

    2) The total amount of support costs assigned to product SR6 using the traditional method is ____________ thoe total amount assigned using ABC.

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    Solution Preview

    1) SR6 is definitely more accurately costed.
    Since we are using three cost drivers under the ABC system and we are identifying the ...

    Solution Summary

    Traditional Cost Systems are discussed.