Overhead costs allocated each month are expected to equal actual overhead costs incurred each month.

Question

Quizplus · Accepted Answer

Seasonal fluctuations and lump-sum payments for items such as property taxes are not expected to be incurred evenly throughout the year. The allocation base (activity such as direct labor hours, machine hours, direct labor costs etc.) can fluctuate (seasonal fluctuations) and can end up being more or less than was expected meaning more of less overhead is applied.

Overhead Costs Allocated Each Month Are Expected to Equal Actual