If the allocation base in the pre-determined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process. A. True B. False

Question

Judah Crawford

Business

9 March, 21:12

If the allocation base in the pre-determined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process. A. True B. False

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Answers (1)

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Lilian Mclean · Answer 1

B. False

Explanation:

The production costs are the cost that is involved in the formation of a product and they include the direct labor and material and the consumer production supplies and the factory overhead. The production cost can also be also to be considered to be the cost of the labor that is delivered to a service to the consumer. The overhead cost includes the insurance, the interest, and the legal fees, and does not involve an averaging process.