Airco Company is tempted to consider support department costs to be facility-level costs that do not need to be applied to products. Which of the following explains what is misguided about this approach?

A) Product costs may be inaccurate because direct labor and direct materials are not correctly accounted for in the product costing system.
B) Product costs may be inaccurate because incorrect cost drivers are used.
C) Product costs may be inaccurate because support department services may be used more heavily by some products than others.
D) Product costs may be inaccurate because straight-line depreciation on factory equipment is treated as a general and administrative expense on the income statement.

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Richard Burnadz · Accepted Answer

Final Answer : C, Explanation :  Support department costs can vary significantly among products, depending on the level of support each product requires. Ignoring these costs can lead to inaccurate product costing by not accounting for the true resources consumed by each product.

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