Which of the following statements is correct?
A) Overhead consists of a limited variety of costs that should have the same cost driver.
B) Overhead consists of a wide variety of costs that should have the same cost driver.
C) Overhead consists of a variety of costs that may potentially have different cost drivers.
D) Overhead consists of a limited variety of costs that must each have a unique cost driver.

Question

Quizplus · Accepted Answer

Overhead costs can come from a variety of sources, and they may each have different cost drivers depending on the nature of the cost. For example, renting a warehouse might be driven by square footage, while accounting costs might be driven by the number of transactions. It is important to identify the appropriate cost drivers for each type of overhead cost in order to accurately allocate those costs to products or services.

Which of the Following Statements Is Correct