Answer the following questions using the information below:
Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set.
Given this change in the cost structure ________.
◦ The costing results for chess pieces under the new system depend on the adequacy and quality of the estimated cost drivers and costs used by the system.
◦ Chess pieces have benefited from the new system.
◦ Chess pieces are definitely more accurately costed.
◦ Chess will now have a lower sales price.
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