Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?
A)Machine-hours
B)Power consumption
C)Direct Labour-hours
D)Machine setups

Question

Quizplus · Accepted Answer

In a highly automated manufacturer, direct labor-hours as an allocation base would be the least appropriate choice because automation reduces the need for human labor. Machine setups would be a more appropriate choice as it captures the setup time needed for the machines to produce the specialty valves. Power consumption might also be a suitable choice as the machines would consume significant power while operating. However, machine-hours could still be used as an allocation base if it is adjusted to reflect the machines' productivity levels.

Which of the Following Would Probably Be the Least Appropriate