FSAS 151 requires that abnormal overhead costs be allocated to products based on excess capacity of the facilities.

Name: FSAS 151 requires that abnormal overhead costs be allocated to products based on excess capacity of the facilities.
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Question

Quizplus · Accepted Answer

FASB ASC 330 (formerly referred to as ARB 43, Chapter 4) requires that only normal costs be allocated to products. Abnormal costs, such as those due to excess capacity, should not be allocated to products but rather expensed as incurred.

FSAS 151 Requires That Abnormal Overhead Costs Be Allocated to Products