A good allocation base:
A) drives the incurrence of direct material costs.
B) drives the incurrence of direct labor costs.
C) drives the incurrence of overhead costs.
D) drives the incurrence of administrative costs.

Question

Quizplus · Accepted Answer

The allocation base should be a factor that is closely related to the incurrence of overhead costs. Direct material and direct labor costs are not used to allocate overhead, and administrative costs are not typically included in product costs.

A Good Allocation Base