Question

An essential quality of an overhead allocation base is that it must ______. Multiple choice question. be a cost associated with producing the firm's goods be calculated using a predetermined overhead rate be common to all the company's products and services vary with all overhead costs

Answer 1

The essential quality of an overhead allocation base is that : It is common to all the company's products and services.

What is overhead allocation?

Overhead allocation refers to the apportionment of indirect costs to produced goods. This means that the amount of overhead to be allocated is a little greater when compared to the direct cost of goods.

With regards to the above, overheads can also be allocated to a specific project or department.

Therefore, the essential quality of an overhead allocation base is that it must be common to all the company's products and services.

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