ACCA MA · Chapter 6 · Question 1 of 11
What is meant by overhead allocation?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Charging a whole item of overhead to a single cost centre that incurred it
Explanation
Allocation charges a whole overhead to one cost centre where it can be identified entirely with that centre. Apportionment shares common overheads between centres, reapportionment moves service centre costs to production centres, and absorption charges overheads to cost units.
More Accounting for overheads MCQs
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- Q5A department's budgeted overheads are $360,000. Budgeted activity is 24,000 direct labour hours and 12,000 machine hours. Work in the…
- Q6Budgeted production overheads were $360,000 and budgeted labour hours were 24,000. Actual overheads were $372,000 and actual labour hours…
- Q7Which of the following would cause production overheads to be under-absorbed?