Choosing direct labor cost rather than direct labor hours as a cost driver for overhead implies that:
A) direct labor cost data is easier to obtain
B) higher paid employees use proportionally more support cost
C) lower paid employees use proportionally less support cost
D) direct labor hour data is easier to obtain

Question

Quizplus · Accepted Answer

Choosing direct labor cost as a cost driver implies that the company believes that employees who are paid more (higher paid employees) are likely to use more support resources, thus incurring more overhead costs.

Choosing Direct Labor Cost Rather Than Direct Labor Hours as a Cost