In a Labor Intensive Company in Which More Overhead Is

question 33

Multiple Choice

In a labor intensive company in which more overhead is used by the more highly skilled and paid employees,which activity base would be most appropriate for applying overhead to production?

• A)Direct labor cost.
• B)Direct material cost.
• C)Direct labor hours.
• D)Machine hours.
• E)Sales value of the product produced.

---

Definitions:

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Price-earnings Ratio

A financial metric comparing the market price of a company's stock to its earnings per share, assisting in determining whether the stock is priced too high or too low.

Industry Outlook

An analysis or forecast of the future of an industry, including trends, challenges, and opportunities.