Answered: Why is it necessary for a corporation…

Why is it necessary for a corporation to estimate the manufacturing overhead associated with particular tasks or work lots?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 12MC: Which of the following would not be classified as manufacturing overhead? A. indirect materials B....

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Question

Why is it necessary for a corporation to estimate the manufacturing overhead associated with particular tasks or work lots?

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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