When a manufacturing company has a highly automated manufacturing plant producing many different products,which of the following is the more appropriate basis of applying manufacturing overhead costs to work in process?
A)direct labor hours
B)direct labor dollars
C)machine hours
D)cost of materials used

Question

Quizplus · Accepted Answer

In a highly automated manufacturing plant, the use of machines is the primary factor affecting the cost of production. Therefore, the machine hours used to produce each product are a more appropriate basis for applying manufacturing overhead costs to work in process. This method ensures that the costs are allocated based on the actual usage of the machines for each product, rather than the indirect measures such as labor hours or costs of materials used.

When a Manufacturing Company Has a Highly Automated Manufacturing Plant