Traditionally,overhead has been assigned based on direct labor hours or machine hours.What effect does this have on the cost of a high-volume item?
A)over-costs the product
B)under-costs the product
C)has no effect the product cost
D)cost per unit is unaffected by product volume

Question

Quizplus · Accepted Answer

Assigning overhead based on direct labor or machine hours can lead to over-costing high-volume items because these methods do not accurately reflect the actual resources consumed by the product.

Traditionally,overhead Has Been Assigned Based on Direct Labor Hours or Machine