Direct-labour hours are not a very good measure of the cause of costs in modern, highly automated departments.

Question

Quizplus · Accepted Answer

Direct-labour hours are based on the assumption that costs in a department are mainly driven by the amount of time employees spend working on products. However, in modern, highly automated departments, many costs are fixed and not directly related to the time spent by employees. Therefore, direct-labour hours are not a very good measure of the cause of costs in these departments.

Direct-Labour Hours Are Not a Very Good Measure of the Cause