Which of the following statements regarding overhead costs is not true? A. Overhead costs might be traceable to an individual cost object but it is not cost effective to do so. B. Overhead costs are only allocated to a single cost object. C. Overhead costs are also known as indirect costs. D. All of the statements about overhead costs are true.
Question
Which of the following statements regarding overhead costs is not true? A. Overhead costs might be traceable to an individual cost object but it is not cost effective to do so. B. Overhead costs are only allocated to a single cost object. C. Overhead costs are also known as indirect costs. D. All of the statements about overhead costs are true.
Solution
To determine which statement regarding overhead costs is not true, let's analyze each option step by step:
A. Overhead costs might be traceable to an individual cost object but it is not cost effective to do so.
- This statement is true. Overhead costs can sometimes be traced to a specific cost object, but it is often not practical or cost-effective to do so.
B. Overhead costs are only allocated to a single cost object.
- This statement is not true. Overhead costs are typically allocated to multiple cost objects, not just a single one. They are distributed across various departments, products, or projects.
C. Overhead costs are also known as indirect costs.
- This statement is true. Overhead costs are indeed another term for indirect costs, as they are not directly traceable to a specific cost object.
D. All of the statements about overhead costs are true.
- This statement is not true because statement B is incorrect.
Therefore, the statement that is not true is: B. Overhead costs are only allocated to a single cost object.
Similar Questions
The following statements are correct excerpt? A. Both direct and indirect costs are exclusively traced to cost object in the same way B. Cost allocation occurs when quantity of resources consumed by a particular cost object cannot be directly measured C. Different costs are used for different purposes D. Costing systems vary depending on the level of sophistication for cost assignment
Which of the following statements is false regarding cost drivers?Multiple choice question.In activity-based costing, the selection of a cost driver is often easier because a measure of the activity volume can be used.The best cost driver is one that is causally related to the cost being allocated.Finding a cost driver that is causally related to the c
Indirect costs are:Question 2Answera.Costs that can be directly attributed to the production of goodsb.Costs that cannot be easily traced to a specific cost objectc.Fixed costs that remain constant regardless of activity levelsd.Easily traceable to a specific cost object
Which of the following statements about cost allocation is incorrect? a. Step-down method does not fully recognise the mutual dependenciesbetween support departments B.To ensure fairness, the same cost driver should be used to allocate costsfor all indirect cost pools. c. A cost may be considered an indirect cost even if it has a one-on-onerelation to the cost object, because the benefit of tracing this cost is toosmall. D. A cost can be direct or indirect cost depending on the cost object ofinterest. E. A training program offered by the human resource department can be a cost object.
Which definition best describes indirect costs? Indirect costs are those costs which are not controlled directly by a manager Indirect costs are those costs which cannot be directly associated with a product or service. Indirect costs are always fixed. Indirect costs are always manufacturing overhead costs.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.