Which of the following statements regarding the uses and limitations of job costing is true?
A) Overhead is allocated to match revenues and costs
B) Most overhead costs are relevant for short-term decisions
C) Managers frequently assume variable overhead costs are fixed
D) Overhead costs are not relevant for most short-term decisions

Question

Quizplus · Accepted Answer

Overhead costs are allocated to match revenues and costs in job costing. This is because job costing involves calculating the cost of materials, labor, and overhead for a specific project or job. Overhead costs such as rent, utilities, and administrative expenses are typically allocated based on a predetermined overhead rate, which is calculated by dividing total estimated overhead costs by a measure of activity such as labor hours or machine hours. This allows for a more accurate determination of the total cost of each job or project.

Which of the Following Statements Regarding the Uses and Limitations