Question: By definition, direct material and direct labor costs can be traced directly to the products for which they were incurred; the cost accounting system does
By definition, direct material and direct labor costs can be traced directly to the products for which they were incurred; the cost accounting system does this. However, production overhead, which is an indirect cost, cannot be so traced. The cost of heating a shoe factory [can /
cannot] be traced directly to the cost of manufacturing each pair of shoes made in the factory, in most cases. Assigning these indirect costs to products requires the use of an overhead rate .
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