Question

Which of the following statements regarding overhead allocation is true? Actual job costs are almost always higher than estimated job costs Actual job costs are almost always the same as estimated job costs Actual job costs are almost always different from estimated job costs Actual job costs are almost always lower than estimated job costs

Answer 1

ANSWER IS

C) Actual costs are almost always different from estimated job costs

First we have to accumulate the actual costs into overhead cost pools and their allocation to a job will be a time taking process.

To avoid this an alternative is generally used, that is allocate the standard costs that are based on historical costs. Therefore the standard costs or estimated costs will never be same as actual costs.