In the traditional manufacturing environment, overhead costs cannot be traced directly to products.

Question

Quizplus · Accepted Answer

Overhead costs, such as rent, utilities, and insurance, are indirect costs that are incurred for the entire factory or production facility, rather than for a specific product. Therefore, they cannot be easily allocated or traced directly to individual products or production runs. Instead, overhead costs are typically allocated to products based on an overhead rate or allocation base, such as direct labor hours or machine hours.

In the Traditional Manufacturing Environment, Overhead Costs Cannot Be Traced