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Manufacturing Indirect costs. Objective of allocating indirect costs

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Please help with answer the following questions.

1. What is direct cost? What criteria are used to determine whether a cost is a direct cost?

To calculate the total cost of the production department or to calculate each product's total cost, it is necessary to allocate some of the rent (and other indirect costs) to the department and to the product.

2. In manufacturing environment, which costs are direct and which are indirect in product costing?

3. What is the objective of allocating indirect manufacturing overhead cost of product?

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Solution Summary

This post helps with a problem about management accounting. Manufacturing indirect costs are examined. The objective of allocating indirect costs are determined. The brief explanations are 169 words in total.

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1. What is direct cost? What criteria are used to determine whether a cost is a direct cost?

Direct costs are the costs which can be directly traced to a product or cost object. The criteria to be used are whether that cost can be traced and whether ...

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