Final answer:
An undercosted product appears more profitable due to being assigned too little cost. This can lead to incorrect business insights and flawed financial reporting.
Step-by-step explanation:
The undercosted product is left with too little cost, making it seem more profitable than it really is. When a product is undercosted, it means that not all of the costs that should be attributed to the product have been, resulting in a misleadingly low cost of production.
This can lead businesses to mistakenly believe that the product is generating more profit than it actually is. Undercosting can affect business decisions, pricing strategies, and may reflect poorly on financial statements.