Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 20 - No. 38)
In a manufacturing setting, what is the purpose of tracking and allocating overhead costs?
To determine the selling price of the finished goods.
To calculate the total cost of production accurately.
To comply with government regulations.
To minimize direct material costs.
Explanation
Overhead costs need to be allocated to the product to have the cost of production calculated accurately.
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