One important reason that managers allocate overhead costs to products is to promote the efficient use of resources.

Question

Quizplus · Accepted Answer

Allocating overhead costs to products helps managers to accurately determine the total cost of producing each product. This information can then be used to make pricing and production decisions, which can encourage the efficient use of resources by identifying areas where cost savings can be made. For example, if a particular product is found to be using a disproportionately high amount of resources, managers may consider ways to reduce the cost of producing that product, such as changing the production process or sourcing cheaper materials. Overall, allocating overhead costs to products is an important tool for promoting efficiency in businesses.

One Important Reason That Managers Allocate Overhead Costs to Products