Some indirect costs may be allocated to departments based on departmental sales in proportion to total sales.

Question

Quizplus · Accepted Answer

It is common practice to allocate indirect costs, such as overhead expenses, to departments based on departmental sales. One method of doing this is by using the department's sales as a proportion of total sales to determine its share of the indirect costs. This is known as the sales-based allocation method.

Some Indirect Costs May Be Allocated to Departments Based on Departmental