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NEW QUESTION: 1
A company makes and sells three products A, B and C.
The selling prices and costs of the three products, using a traditional absoprtion costing system, are shown in the table below.
The company has undertaken an analysis of overhead costs using activity-based costing (ABC).
The revised overhead costs for products A, B and C are $6, $32 and $55 respectively.
When comparing the figures obtained under the two costing methods, which of the following statements are true?
Select ALL that apply.
A. The product that is the most profitable under traditional absorption costing makes a loss under the ABC methodology.
B. Activity-based costing results in a lower level of overhead costs for the company.
C. Product C is currently overpriced based on cost plus pricing and the selling price should be reduced.
D. Product A shows a profit under ABC but had appeared loss making under traditional absorption costing.
E. Product B makes a profit under both methods, but the profit is lower using ABC.
NEW QUESTION: 2
A. Option D
B. Option C
C. Option A
D. Option B
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