Schiff Company produces seven products PO6 costs 24000 per u

Schiff Company produces seven products. PO-6 costs $24000 per unit under their traditional cost system using one cost driver. An analysis of the activities and their costs revealed that three cost dnivers would be used under the new ABC system. The new cost of PQ-6 was delermined to be $190.00 per unit. Given this change in the cost O A. PQ-6will now command a lower sales price O B. Schilfs other products will be assigned a smaller share of overhead coss O C. PQ-6 will now command a higher sales price. O D. PQ-6 costing results undor the new system depend on the adequacy and quality of the estimated sales and sales revenue used by the system

Solution

Answer is A. PQ-6 will now command lower sales prices.

Explanation; With the introduction of new activity-based costing, overheads assigned is lower resulting low cost which mainly results in fixing selling price at the lower price.