Direct-labor hours are a good cost driver choice for overhead costs in modern, highly automated departments.

Question

Quizplus · Accepted Answer

Direct-labor hours would not be a good cost driver choice for overhead costs in modern, highly automated departments because these departments use less direct labor and more automation. The use of direct-labor hours would not accurately reflect the level of overhead costs used in these types of departments. Other cost drivers, such as machine hours or number of units produced, would be better suited for these departments.

Direct-Labor Hours Are a Good Cost Driver Choice for Overhead