Question

Activity based costing allocates overhead (indirect costs) to fixed costs based upon four different types of drivers. Which of the following is one of the cost drivers that serves as a basis of cost allocation? ​ a. number of units produced b. direct equipment costs c. number of labor hours d. quantity of materials used

Answer 1

Answer:

c. number of labor hours

Explanation:

The direct labor hours metric can estimate the amount of time the manufacturing capacity was used for each product.

Consider the bulk unit number is not a good metric because; the products aren't homogeneous and use different quantities of materials.

Also, the direct equipment cost cannot be linked to production. The depreciation of the equipment is an overhead cost, not a cost driver.