One of the accountants at Agave Industries is attempting to identify the activity measure best suited to use for the ﬂexible budget.Based on the limited information provided, which of the following activity measures should be used for the ﬂexible budget?
A)Labor cost.
B)Set-ups.
C)Machine hours.
D)Labor hours.
E)None of the answers is correct.

Question

One of the accountants at Agave Industries is attempting to identify the activity measure best suited to use for the ﬂexible budget.Based on the limited information provided, which of the following activity measures should be used for the ﬂexible budget? 
A)Labor cost. 
B)Set-ups. 
C)Machine hours. 
D)Labor hours. 
E)None of the answers is correct.

Quizplus · Accepted Answer

Based on the limited information provided, it is unclear if labor cost, set-ups, or labor hours are the primary drivers of overhead costs. Therefore, the best choice for the activity measure would be machine hours, as it is a common measure in manufacturing and can be used to allocate overhead costs to products.

One of the Accountants at Agave Industries Is Attempting to Identify