
Concept explainers
Concept Introduction:
Direct and Indirect Costs:
Manufacturing overhead costs:
Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads.
To discuss:
The reason behind allocation of overhead costs instead of tracing these costs like direct material and direct labor costs.

Answer to Problem 1DQ
Solution:
The reason behind allocation of overhead costs instead of tracing these costs like direct material and direct labor costs is that the overhead costs cannot be directly traced to the product.
Explanation of Solution
Manufacturing costs can be divided into two types; Direct costs and Indirect costs. Direct costs are easily traceable with the product like direct material and direct labor and indirect costs are not traceable easily like indirect material indirect labor and overheads.
Hence, the reason behind allocation of overhead costs instead of tracing these costs like direct material and direct labor costs is that the overhead costs cannot be directly traced to the product.
Hence, the overhead costs cannot be directly traced to the product.
Want to see more full solutions like this?
- Please show me how to solve this financial accounting problem using valid calculation techniques.arrow_forwardCould you help me solve this financial accounting question using appropriate calculation techniques?arrow_forwardCan you explain this general accounting question using accurate calculation methods?arrow_forward
- how much overhead cost would be assigned to product G98X using the activity based costing system ?arrow_forwardThe closing price of a stock is $74.55, and the net earnings per share are $3.50. The stock's P/E ratio is .arrow_forwardI need guidance with this general accounting problem using the right accounting principles.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





