Bookmark question for later Overhead allocation based on volume alone: results in facility support costs not being allocated among the various products. is a key aspect of the ABC model. must be used for external financial reporting. will systematically overcost high-volume products and undercost low-volume products.

will systematically overcost high-volume products and undercost low-volume products.

Explanation:

Manufacturing costs can be defined as the overall costs associated with the acquisition of resources such as materials and the cost of converting these raw materials into finished goods. Manufacturing costs include direct labor costs, direct materials cost and manufacturing overhead costs.

An overhead allocation that is typically based on volume alone, will systematically overcost the high-volume products that are also complex and undercost low-volume products that are simple in nature.

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