Question

Which of the following statements regarding manufacturing overhead allocation is false in a normal costing system?...

Which of the following statements regarding manufacturing overhead allocation is false in a normal costing system?

a.
Total budgeted manufacturing overhead costs are known at the beginning of the accounting period.
  
b.
It includes all manufacturing costs that can be directly traced to a product or service.
  
c.
Allocated amounts are credited to Manufacturing Overhead Allocated Control.
  
d.
The costs can be grouped as a single or multiple indirect-cost pool(s).

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Answer #1

correct option is "B" - It includes all manufacturing costs that can be directly traced to a product or service

The estimated manufacturing overhead at the beginning of period includes all manufacturing cost that cannot be directly traceable to product or service or in other words it includes all indirect manufacturing cost such as factory supplies ,property taxes ,indirect material ,indirect labor depreciation on manufacturing overhead etc.

other options all are true :

The cost can be classified in to a single pool or in multiple cost pool .

Cost are estimated at beginning of period .

On the basis of estimated overhead rate ,overhead are allocated to jobs

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