Suppose That the Company Decides That the Present Activity-Based Costing

Suppose that the company decides that the present activity-based costing system is too complex and that all costs (except for the costs of purchased decorations) should be allocated on the basis of the number of guests. In that event, what would you expect to happen to the costs of cakes?

A) The cost of cakes for receptions with more than the average number of guests would go down.
B) The cost of cakes for receptions with fewer than the average number of guests would go down.
C) The costs of all cakes would go down.
D) The costs of all cakes would go up.

Correct Answer:

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