Misleading product cost numbers are MOST likely the result of misallocating:
A)direct material costs.
B)direct manufacturing labor costs.
C)overhead costs.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Misallocating overhead costs can result in misleading product cost numbers because overhead costs are indirect costs that are allocated to different products using estimates or arbitrary allocation methods. If these estimates or allocation methods are inaccurate, the resulting product costs will be misleading. Direct material and direct manufacturing labor costs are relatively easier to track and allocate accurately.

Misleading Product Cost Numbers Are MOST Likely the Result of Misallocating