Polson Pool Company is involved in a number of competitive bidding situations. The following costs are anticipated for a project to be bid for Terrance Manufacturing: Direct material$680,000 Direct labor 2,450,000 Allocated variable overhead 570,000 Allocated fixed cost 230,000 Which of these costs would be treated differently if Polson had either excess capacity or no excess capacity?
A. Allocated variable overhead, $570,000.
B. Allocated fixed cost, $230,000.
C. Direct labor, $2,450,000.
D. Direct materials used, $680,000.
E. None of these, as all four costs are considered in both situations.
Answer: B
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