Which one of the following is used most frequently to allocate overhead costs in continuous manufacturing operations?
A)direct labour dollars
B)direct labour hours
C)machine hours
D)machine maintenance dollars

Question

Quizplus · Accepted Answer

In continuous manufacturing operations, machines are used extensively for a prolonged period of time. Therefore, the most appropriate way to allocate overhead costs is by using machine hours as a cost driver. This method ensures that costs are allocated based on the actual use of the machines, which is the main activity in this type of manufacturing process. Allocation based on direct labor dollars or hours may not be appropriate as labor may not be directly related to the use of machines in this type of operation. Allocation based on machine maintenance dollars may not be appropriate either, as maintenance costs may not necessarily reflect actual machine usage.

Which One of the Following Is Used Most Frequently to Allocate