In a labor intensive company in which more overhead is used by the more highly skilled and paid employees,which activity base would be most appropriate for applying overhead to production?
A)Direct labor cost.
B)Direct material cost.
C)Direct labor hours.
D)Machine hours.
E)Sales value of the product produced.

Question

Quizplus · Accepted Answer

In a labor-intensive company where overhead is closely related to the skills and pay of employees, direct labor cost is the most appropriate activity base for applying overhead, as it directly correlates with the labor expenses incurred.

In a Labor Intensive Company in Which More Overhead Is