Question

In a(n) _________ cost system, factory overhead is assigned to an overhead control account and then allocated to products and services.

a) Absorption
b) Variable
c) Fixed
d) Marginal

Answer 1

In an absorption cost system, factory overhead is assigned to an overhead control account and then allocated to products and services.

Step-by-step explanation:

In an absorption cost system, factory overhead is assigned to an overhead control account and then allocated to products and services. This means that the total production cost includes both direct costs (such as direct materials and direct labor) and indirect costs (such as factory overhead). The absorption cost system takes into account all costs associated with production, providing a more comprehensive view of the cost per unit.