Which of the Following Statements Is False

question 149

Multiple Choice

Which of the following statements is false?

• A) Both direct and indirect costs can be assigned to a cost object.
• B) Cost drivers are often selected based on the availability of information.
• C) Volume measures are good drivers for fixed overhead costs.
• D) Fixed costs that do not have a definitive cost driver are allocated using an allocation base that distributes a rational share of the cost to each product.

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Definitions:

Machine Hours

A measure of production output or activity based on the number of hours a machine operates.

Overhead Application Rate

A calculation used to allocate indirect costs to specific production activities or departments based on a predetermined formula.

Machine Hours

A measure of the amount of time a machine is used during a specified period, often used as a basis for allocating machine-related costs to products.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual products or job orders, calculated before a period begins based on estimated overhead costs and activity levels.