Question

Which of the following is true?

a. Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.
b. The departmental overhead rate is not usually based on measures closely related to production volume.
c. The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume.
d. Allocated overhead costs will be the same no matter which allocation method is used.

Answer 1

The correct answer is letter "A": Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor.

Step-by-step explanation:

Overhead is an accounting term used for costs that must be paid, even though the company receives no profits. A company would not be able to survive without paying its overhead expenses but the costs are not connected directly to a product or service being generated. Examples of overhead costs are rent, utilities, office supplies, and maintenance.

Overhead costs are difficult to be traced because they can be assigned to more than one factor.