Answer: The options are given below:
A. Use of a single predetermined overhead rate.
B. Use of direct labor hours or direct labor cost to assign overhead.
C. Assumption of correlation between direct labor and incurrence of overhead cost.
D. Use of multiple cost drivers to allocate overhead.
The correct option is D.
Explanation: The traditional costing system refers to the allocation of factory overhead to products, and this is based on the total amount of production resources that have been consumed.
When using the traditional costing system, the overhead is usually applied based on either the total number of direct labor hours consumed or the total number of machine hours used.
The traditional costing systems treat overhead costs as a single pool of indirect costs. Traditional costing is optimal when indirect costs are low when in comparison with direct costs.
