Overhead costs:
A) Cannot be traced to cost objects in a cost-effective manner, but are instead allocated to cost objects.
B) Cannot be allocated to cost objects.
C) Are always variable costs.
D) Are only incurred by manufacturing companies.

Question

Quizplus · Accepted Answer

Overhead costs cannot be easily and directly traced to specific cost objects (such as a particular product or customer) but must be allocated based on some predetermined method (such as machine hours or labor hours). This allocation process can be costly, but is necessary to ensure that indirect costs are appropriately assigned to cost objects.

Overhead Costs