Question

Which of the following statements is true about product diversity?

a. Product diversity is caused by differences in product size, product complexity, setup time, and size of batches.
b. Product diversity is one of the reasons for a firm to choose the plantwide costing method over other costing methods.
c. Product diversity causes product cost distortion only when the non-unit overhead costs are insignificant.
d. Product diversity results in lesser overhead activities at the unit-level in the production process.

Answer 1

Product diversity is caused by differences in product size, product complexity, setup time, and size of batches.

Step-by-step explanation:

The statement that is true about product diversity is option a: Product diversity is caused by differences in product size, product complexity, setup time, and size of batches. Product diversity refers to the variety of products or product features offered by a firm. It can be caused by differences in product size, complexity, setup time, and size of production batches. For example, if a company produces both large and small-sized products, complex and simple products, and has different setup times and batch sizes for each product, it can be said to have a high level of product diversity.