Overhead Costs

question 53

Multiple Choice

Overhead costs:

• A) Cannot be traced to cost objects in a cost-effective manner, but are instead allocated to cost objects.
• B) Cannot be allocated to cost objects.
• C) Are always variable costs.
• D) Are only incurred by manufacturing companies.

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Definitions:

Revenue

The sum of all revenue a company earns from selling products or providing services within a specified timeframe.

Expense

Costs incurred in the process of generating revenue, reflected in the income statement.

Asset

An economic resource owned or controlled by an individual or corporation, expected to provide future benefits.

Liability

Economic responsibilities or liabilities an organization has to other parties, which require repayment over a period via the exchange of economic assets.