Question

Products R5 and CP8 each are assigned $100.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, R5 requires 45 minutes less setup time than CP8. When compared with an ABC system that uses setup time as a driver, CP8 is _____________ under the traditional system, relative to R5 g

Answer 1

- Products R5 and CP8 each are assigned $100.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, R5 requires 45 minutes less setup time than CP8.