Indirect operating expenses allocated to each department are normally approximations.

Question

Quizplus · Accepted Answer

Indirect operating expenses, such as rent, utilities, and general overhead costs, are typically allocated to departments based on some predetermined allocation basis, such as square footage or number of employees. Because these allocations are approximations, they may not accurately reflect the actual expenses incurred by each department. Therefore, indirect expenses allocated to each department are normally approximations.

Indirect Operating Expenses Allocated to Each Department Are Normally Approximations