The answer is Assigning manufacturing overhead costs to jobs does not ensure a profit. The units produced may not be sold and if they are sold, they may not be sold at prices sufficient to cover all costs.
Explanation:
- When job selling price is fixed , allocating all over head cost ( common or e.g corporate cost ) will not guarantee that a profit will be earned by a company for the period . Generally job price is fixed initially at job contract.
- In other words if selling price is fixed ,and allocating all overhead cost to jobs will not increase the overall profit. Even it can be mislead to decide the profitability of individuals job.
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