under their traditional cost system

Schiff Company produces seven products. PQ – 6 costs $240.00 per unit under their traditional cost system using one cost driver. An analysis of the activities and their costs revealed that three cost drivers would be used under the new ABC system. The new cost of PQ – 6 was determined to be $190.00 per unit. Given this change in the cost: PQ – 6 costing results under the new system depend on the adequacy and quality of the estimated sales and sales revenue used by the system. PQ – 6 will now command a lower sales price. PQ – 6 will now command a higher sales price. Schiff’s other products will be assigned a smaller share of overhead costs.

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