The primary difficulty in the allocation of overhead costs to prospective projects is that the:
A) allocation will reduce the project's NPV.
B) discount rate is unknown.
C) costs may not represent an incremental expense.
D) expenses may have been previously allocated.

Question

Quizplus · Accepted Answer

Overhead costs may represent shared expenses that are not directly attributable to a specific project. Therefore, allocating these costs to projects may not accurately represent an incremental expense and may lead to incorrect project evaluation.

The Primary Difficulty in the Allocation of Overhead Costs to Prospective