Allocations of overheads should not affect a project's incremental cash flows unless the:
A) project actually changes the total amount of overhead expenses.
B) overhead will not be recovered at the end of the project.
C) overhead is not currently fully allocated to existing projects.
D) accountant is required to allocate costs to this project.

Question

Quizplus · Accepted Answer

Allocations of overheads should not affect a project's incremental cash flows unless the project actually changes the total amount of overhead expenses. Incremental cash flows are concerned with changes in cash flows directly attributable to the project.

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