Allocations of overhead should not affect a project's incremental cash flows unless the:
A) project actually increased overhead expenses.
B) overhead cannot be recovered at the end of the project.
C) overhead cannot be allocated to other projects.
D) accountant is required to allocate costs to this project.

Question

Quizplus · Accepted Answer

Overhead should only affect a project's incremental cash flows if the project actually increases overhead expenses. Otherwise, overhead is considered a sunk cost and should not be allocated to the project.

Allocations of Overhead Should Not Affect a Project's Incremental Cash