Assume a company uses a plant wide predetermined

Reference no: EM13605005

Assume a company uses a plant wide predetermined manufacturing overhead rate that is calculated using direct labor hours as the cost diver. The use of this plant wide pre-determined manufacturing overhead rate has resulted in cost distortions. The company's high volume products are over-costed and its low-volume products are under-costed. What effects of this cost distortion will the company most likely be experiencing? Why might the cost distortions be harmful to the company's competitive position in the market?

Reference no: EM13605005

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