The application of overhead costs to products involves the use of:
A) exact figures.
B) fixed costs only.
C) variable costs only.
D) estimates.

Question

Quizplus · Accepted Answer

Overhead costs, such as rent, utilities, and depreciation, are indirect costs that cannot be easily traced to specific products or services. Therefore, they must be allocated or applied to products based on estimates and assumptions. These estimates may be based on historical data, current trends, or other factors, but they are never exact figures. Fixed and variable costs may also be allocated to products, but they are only a portion of the total overhead costs that must be applied to each product.

The Application of Overhead Costs to Products Involves the Use