Traditionally,the most popular companywide base for allocating overhead to products was:
A) machine hours.
B) direct labor hours or costs.
C) number of units produced.
D) number of units sold.

Question

Quizplus · Accepted Answer

Direct labor hours or costs are a better choice than machine hours, number of units produced, or number of units sold because they are directly related to the production of the product. This method allocates overhead based on the amount of time or cost of direct labor used in making the product, which is a more accurate representation of the amount of overhead incurred. Additionally, this method incentivizes efficiency in the workforce, as fewer direct labor hours will result in lower overhead allocation.

Traditionally,the Most Popular Companywide Base for Allocating Overhead to Products