A company estimates the total indirect production costs and applies them to the products elaborated during the period. In the end, an adjustment wi...

A company estimates the total indirect production costs and applies them to the products elaborated during the period. In the end, an adjustment will have to be made, since the actual incurred costs will probably not be exactly the same as the estimated ones. In this example, the company produces three items: O, P, and Q. What is the company's procedure to allocate the indirect costs to the products?


The company applies the estimated total indirect production costs to the products at the end of the period.
The company makes a forecast of the indirect costs of the production departments at the beginning of the period and applies them to the products elaborated during the period.
The company applies the actual incurred costs to the products elaborated during the period.