Predetermined indirect cost rates are necessary because:
A) indirect costs cannot be traced directly to cost objects.
B) product costs need to be calculated promptly for decision-making purposes.
C) indirect costs are not incurred evenly throughout the accounting period.
D) all of the options are correct.

Question

Quizplus · Accepted Answer

Predetermined indirect cost rates are necessary for all the reasons listed: they address the challenge of indirect costs not being directly traceable to cost objects, allow for prompt calculation of product costs for decision-making, and account for the uneven incurrence of indirect costs throughout the accounting period.

Predetermined Indirect Cost Rates Are Necessary Because