Managerial Accounting (15th Edition)

Published by McGraw-Hill Education
ISBN 10: 007802563X
ISBN 13: 978-0-07802-563-1

Chapter 3 - Job-Order Costing - Questions - Page 113: 3-4

Answer

If the cost is not easily traceable to each product or to each job, it must be assigned through an allocation process. These are known as indirect costs and they tend to be accumulated in manufacturing overhead and after that, they are allocated to the finished goods.

Work Step by Step

Examples of these type of costs are represented by the depreciation of the factory building or utilities. All of these are known as indirect production costs.
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