In Terms of Allocating Fixed Overhead Cost to Products, Generally

question 18

Multiple Choice

In terms of allocating fixed overhead cost to products, generally accepted accounting principles in the U.S.:

• A) Require that such allocations be based on normal capacity.
• B) Allow for the use of either practical capacity or theoretical capacity.
• C) Don't apply since the resulting data are used only internally (for control purposes).
• D) Specify only that such costs be "reasonably allocated" to outputs.
• E) Require that these costs be expensed in the period incurred.

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