An under allocated indirect cost is also called ____________?
Correct answer: D. both a and bAccounting & Auditing
- A. under applied indirect cost
- B. under absorbed indirect cost
- C. absorbed indirect cost
- D. both a and bAccounting & Auditing
Explanation
An underallocated indirect cost means that the amount applied to products was less than the actual indirect cost incurred. It is therefore also called underapplied or underabsorbed indirect cost.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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