Overhead expenses are allocated to particular departments:
A)Strictly on floor space
B)Strictly on sales volume
C)Based on a ratio of space to sales volume
D)By floor space or sales volume
E)None of these

Question

Quizplus · Accepted Answer

Overhead expenses can be allocated based on either floor space or sales volume, depending on the nature of the expenses and the needs of the organization. Allocating overhead expenses strictly on floor space or sales volume may not accurately reflect the actual usage of resources by each department. Therefore, allocating overhead expenses based on a ratio of space to sales volume is a better choice as it takes into account both factors and provides a more accurate allocation.

Overhead Expenses Are Allocated to Particular Departments