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Managerial Accounting

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Moderate

Product Cross-Subsidization Effects

MGRACT-AYGFXK

Overcosting some products while undercosting others

A

is more likely to occur with volume based costing than with activity based costing.

B

occurs with using volume based costing when products are similar to one another.

C

occurs when too few cost drivers are used to allocate costs.

D

will occur whenever direct labor is used to allocate overhead costs.