Overhead cost is the total of ____________.
Correct answer: D. all indirect costs.
- A. all specific costs
- B. all direct costs.
- C. indirect and direct costs.
- D. all indirect costs.
Explanation
Overhead consists of costs that cannot be directly traced to a particular product or unit, such as indirect materials, labour and expenses. Direct costs are charged specifically to the cost object and are therefore excluded.
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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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