Respuesta :

Answer:

The following are the benefits:

  1. Ability to bear running and recurring costs;
  2. Efficiency of production

Explanation:

The practice of distributing indirect costs to revenue-generating projects is being referred to as overhead allocation.

The overhead is determined by the sum of indirect labor and incurred expenses. This can be represented by 25% - 50% of the expenses incurred by a firm.

In details the benefits of allocating based on Demonstrated Capacity are the following:

  1. Waste and defects would be controlled during production;
  2. While the market is highly volatile and competitive it becomes easier to make accurate pricing;
  3. A firm in a multi-product business will be able to evaluate the profit margin of each product;
  4. This can help the management in decision making especially when the cost information is being supplied;
  5. You can easily evaluate the effectiveness of a department;
  6. It helps you to fix the price of a product
Tundexi

The advantages of assigning based on demonstrated capacity includes facilitation of decision-making, assessing operation effectiveness and determination of product price.

What is demonstrated capacity?

A demonstrated capacity means theactual rate of output that has been achieved in recent history which allows for inefficiency.

Generally, the location of overheads on the basis of demonstrated capacity have some benefit that includes:

  • assist management in making decisions when cost data is provided
  • assist in assessing a department's effectiveness
  • assists in determining the pricing of a thing.

Read more about demonstrated capacity

brainly.com/question/25899399

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