Question

Which of the following statements is (are) false regarding cost allocations and product costing? (A) It is easier to determine the individual product cost for a manufacturer than it is for a wholesaler. (B) In general, indirect costs are assigned, while direct costs are allocated. A. Only A is false. B. Only B is false. C. Both A and B are false. D. Neither A nor B is false.

Answer 1

Answer:

C. Both A and B are false.

Explanation:

Costing of a manufacturing concern business involves multiple cost like direct, indirect and overhead. Deciding and calculating each more is a difficult process than a wholesale business which only have limited cost like variable and fixed.

In general the direct costs are assigned because they are directly attributable to the product and overhead costs are allocated on a predetermined rate because the cannot be attributed to a product directly.