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Manufacturing overhead costs

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Explain why manufacturing overhead costs cannot be directly associated with any particular product, and how such costs are allocated to each of several company's products under the so-called traditional approach to overhead allocation.

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This solution explains why manufacturing overhead costs cannot be directly associated with any particular product and provides some examples of how such costs are allocated to each of several company's products under the traditional approach to overhead allocation.

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Manufacturing overhead costs cannot be directly associated with any particular product as they are common costs. For example, rent can't be associated with a single product as it is an indirect cost. Under this method, the costs are allocated as per the volume or machine hours. "The method ...

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