The key to allocating overhead costs is the determination of the ____.
A) overhead
B) cost driver
C) direct labor
D) product cost

Question

Quizplus · Accepted Answer

Overhead costs are indirect costs that cannot be traced directly to a specific product or service. Therefore, a cost driver is used to allocate the overhead costs to the products or services. The cost driver is a factor that causes a change in the overhead costs, such as machine hours used or number of employees. By determining the appropriate cost driver, overhead costs can be distributed more accurately to the products or services that caused them.

The Key to Allocating Overhead Costs Is the Determination of the ____