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Primary distribution of overheads refers to the initial allocation of indirect costs to different cost centers based on predetermined criteria, typically using direct labor hours, machine hours, or other relevant bases. In contrast, secondary distribution involves redistributing the overhead costs from service cost centers to production cost centers, ensuring that all costs are accurately reflected in the final product costs. This two-step process helps in achieving a more precise allocation of overhead expenses, enhancing the accuracy of cost management and pricing decisions.

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