Because labor hours are related closely to the volume of activity in the factory, these traditional product-costing systems often are said to be volume-based costing systems.

Question

Quizplus · Accepted Answer

Traditional product-costing systems typically allocate overhead costs based on a volume-related measure, such as labor hours or machine hours, because these are often closely related to the level of production activity.

Because Labor Hours Are Related Closely to the Volume of Activity