In General, Allocating Fixed Cost Is Less Challenging Than Allocating

question 36

True/False

In general, allocating fixed cost is less challenging than allocating variable cost.

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Definitions:

Overapplied Overhead

A situation where the amount of overhead allocated to products or services exceeds the actual overhead expenses incurred.

Applied Overhead

The process of assigning a portion of estimated overhead cost to specific production jobs or departments based on a predetermined rate.

Actual Overhead

includes the real, as incurred, indirect costs associated with manufacturing a product or providing a service, including utilities and rent.

Cost Allocation

The process of assigning indirect cost to a cost object, such as a job.