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Which of the following statements is TRUE concerning product costing systems?

A. Peanut butter costing is another term for direct costing.
B. Undercosting or overcosting does not relate to product cost cross-subsidization.
C. Companies that undercost products always sell products at a loss.
D. Companies that overcost run the risk of losing customers.

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GinnyAnsweridn

Final answer:

Product costing systems are essential for determining production costs and pricing strategies in businesses. Overcosting can lead to customer loss, while undercosting relates to product cost cross-subsidization.


Explanation:

Product costing systems play a crucial role in determining the costs of production and pricing strategies adopted by businesses.

One true statement concerning product costing systems is that companies that overcost run the risk of losing customers due to pricing their products higher than perceived value, which can result in customer dissatisfaction and loss of market share.

Another key aspect is that undercosting or overcosting relates to product cost cross-subsidization where inaccuracies in product costing can lead to one product subsidizing the costs of another within a company's product line.


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