When manufacturing overhead costs are assigned to production in a process cost system, it means that

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Arabella Singleton

Business

8 December, 06:17

When manufacturing overhead costs are assigned to production in a process cost system, it means that

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Sanaa Coleman · Answer 1

When manufacturing overhead costs are assigned to production in a process cost system, it means that the business uses absorption costing system.

Explanation:

When manufacturing overhead costs are assigned to production in a process cost system, it means that the business uses absorption costing system.

Absorption costing system is that where units of products and inventories are valued using full cost. Full cost implies that each product would be charged for an amount of the fixed production overhead in addition to the variable cost.

The fixed overhead is charged using a predetermined overhead absorption rate.