In developing unit costs, overhead costs should be assigned using activity drivers. Which would be the likely activity driver for a production process using a lathe?
A)units produced
B)direct labor hours
C)machine hours
D)direct materials cost

Question

Quizplus · Accepted Answer

Machine hours would be the best activity driver for a production process using a lathe as the majority of the overhead costs would be related to the use of the machine itself. Using machine hours as the activity driver would allocate the overhead costs in a way that is more reflective of the actual usage of the machine.

In Developing Unit Costs, Overhead Costs Should Be Assigned Using