Indicate whether each of the following statements is true or false.Volume measures include number of labor hours, quantity of direct materials used, and number of units sold. A variable overhead cost should be allocated to cost objects using a volume measure as the allocation base. A causal relationship exists between a fixed overhead cost and the volume of production. The allocation base used by a manufacturer to allocate overhead costs may affect the apparent profitability of the various products the company makes. Fixed indirect costs are often allocated using arbitrary allocation bases.
What will be an ideal response?
| Volume measures include number of labor hours, quantity of direct materials used, and number of units sold. | True |
| A variable overhead cost should be allocated to cost objects using a volume measure as the allocation base. | True |
| A causal relationship exists between a fixed overhead cost and the volume of production. | False |
| The allocation base used by a manufacturer to allocate overhead costs may affect the apparent profitability of the various products the company makes. | True |
| Fixed indirect costs are often allocated using arbitrary allocation bases. | True |
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