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CHAPTER 4 ABC QUIZ Product-cost cross-subsidization results from allocating indirect costs to multiple products. assigning traced costs to each product. assigning costs to different products using varied costing systems within the same organization. assigning broadly averaged costs across multiple products without recognizing amounts of resources used by which products. In refining a cost system total direct costs are unchanged because they can be traced in an economically feasible way to the product and traced costs are more accurate. the costs are grouped in homogeneous pools of the same or similar amounts. the criterion of cause and effect is used to relate indirect costs to a factor that systematically links to a cost object. the organization looks for cost-allocation bases that will provide a uniform spreading of indirect costs to each product.  The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble. Marblette Italian Marble Purchase volume 20,000 1,000 Purchase cost per unit $50 $50 Shipments received 12 12 Hours used per shipment 5 3 Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of their receiving costs of $40,000. They realize that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume. Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures? The use of this refined activity-based costing system will increase the accuracy of the resulting product costs because a more appropriate cost driver will be used as the allocation base. The traditional allocation method currently being used is causing product-cost cross-subsidization with the product line Marblette being undercosted. The cost allocated to the Italian Marble product li