Unit-based product costing uses which of the following procedures?
A)All overhead costs are expensed as incurred.
B)Overhead costs are traced to departments, then costs are traced to products.
C)Overhead costs are traced directly to products.
D)Overhead costs are traced to activities, then costs are traced to products.

Question

Quizplus · Accepted Answer

Unit-based product costing typically involves tracing overhead costs to departments or cost centers, and then those costs are allocated to products based on some measure of activity (like machine hours or labor hours). This method does not trace overhead costs directly to products (as in C) or to activities first (as in D), and it does not expense all overhead costs as incurred (as in A).

Unit-Based Product Costing Uses Which of the Following Procedures