Cost Allocations Ignore the "Lumpy" Nature of Capacity Resources, and Estimate

question 23

True/False

Cost allocations ignore the "lumpy" nature of capacity resources, and estimate costs as if we can match supply and demand continuously and smoothly.

---

Definitions:

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, depreciation, and salaries for production supervisors.

Direct Labor

The wages of those persons whose efforts directly affect the quality or other characteristics of the products manufactured.

Raw Materials

Basic materials used in the manufacturing process to produce finished goods, not yet processed or used in production.

Selling And Administrative Costs

Expenses related to the selling of products and the administrative aspects of a business, excluding production costs.