In an actual cost system, it is difficult to determine the _____ per unit.
A) direct labor cost
B) overhead cost
C) cost of direct material consumed
D) All of these are correct.
E) None of these are correct.

Question

Quizplus · Accepted Answer

Overhead cost includes indirect expenses such as rent, utilities, and other overhead expenses that cannot be directly traced to a unit of production. It is difficult to determine the overhead cost per unit in an actual cost system because overhead costs are allocated based on a predetermined overhead rate, which may not accurately reflect the actual usage of overhead resources by each unit of production. Direct labor cost and cost of direct material consumed can be easily traced to each unit of production, but overhead cost is allocated based on indirect methods, making it difficult to accurately determine the overhead cost per unit.

In an Actual Cost System, It Is Difficult to Determine