Question

If the allocation base in the pre-determined overhead rate does not drive overhead costs, it will nevertheless provide reasonably accurate unit product costs because of the averaging process. A. True B. False

Answer 1

Answer:

B. False

Explanation:

• The production costs are the cost that is involved in the formation of a product and they include the direct labor and material and the consumer production supplies and the  factory overhead.  

• The production cost can also be also to be considered to be the cost of the labor that is delivered to a service to the consumer. The overhead cost includes the insurance, the interest, and the legal fees, and does not involve an averaging process.