Consider the following statements.i. Product diversity creates problems in product costing because diverse products tend to utilise productive activities in very different ways.ii. Overhead costs that are not incurred at the unit level create product-costing problems because they do not vary with measures such as direct labour hours or machine hours.iii. Product diversity exists when a single product, such as pens, are made in different colours.Which of the above statement/s is/are true?A) iB) iiC) i and iiD) i and iii

Question

Consider the following statements.i. Product diversity creates problems in product costing because diverse products tend to utilise productive activities in very different ways.ii. Overhead costs that are not incurred at the unit level create product-costing problems because they do not vary with measures such as direct labour hours or machine hours.iii. Product diversity exists when a single product, such as pens, are made in different colours.Which of the above statement/s is/are true?A)  iB)  iiC)  i and iiD)  i and iii

Joshua Stanley · Accepted Answer

Final Answer : C, Explanation :  Statement i is true because products that require different resources and labour will have a different cost structure. This can create difficulties in accurately assigning costs to products.Statement ii is also true because overhead costs that are not related to individual units, such as facility rent or administrative expenses, cannot be easily allocated to specific products.Statement iii is false because product diversity refers to a range of products within a company's portfolio, not just variations of a single product.

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