An approach in which the company under-costs it's one product and over-costs at least one product is classified as __________?
Correct answer: C. product-cost cross subsidizing
- A. service-cost across subsidizing
- B. product-price cross subsidizing
- C. product-cost cross subsidizing
- D. product cross subsidizing
Explanation
Product-cost cross-subsidising occurs when one product is undercosted and at least one other product is overcosted. The overcosted products effectively bear costs that belong to the undercosted product.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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