Machine usage in a department causes most of the overhead costs such as depreciation expense,maintenance expense and repair expense.What is the most appropriate cost-allocation base for applying overhead costs to products?
A) the number of machines
B) the salvage value of the machines
C) the average age of the machines
D) the number of machine hours

Question

Quizplus · Accepted Answer

The most appropriate cost-allocation base for applying overhead costs to products in this scenario is the number of machine hours. This is because the majority of the overhead costs are attributed to the usage of the machines, which can be measured by the number of machine hours used. This method of allocating overhead costs is also commonly used in manufacturing industries.

Machine Usage in a Department Causes Most of the Overhead