Overhead Cost Allocation is the method used to distribute overhead costs to different departments or products based on relevant criteria.

What is the overhead cost allocation method? The overhead cost allocation method involves distributing indirect costs, such as utilities and administrative expenses, to different departments or products based on specific allocation bases like labor hours or machine usage.

What is the method of allocation of cost? The method of allocation of cost refers to the process of assigning indirect costs to different departments, products, or cost centers using allocation bases such as square footage, labor hours, or machine hours.

Why are overhead costs allocated across different products? Overhead costs are allocated across different products to ensure each product bears a fair share of indirect costs, allowing for accurate product costing, pricing decisions, and profitability analysis.

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Overhead cost allocation provides accurate product costing, aids in pricing decisions, enhances cost control, and ensures fair distribution of indirect costs.

Overhead Cost Allocation involves distributing indirect costs to various departments or products based on specific criteria, ensuring accurate costing and effective cost control.