Allocating Indirect Costs Based on Machine Hours Is an Example

question 4

True/False

Allocating indirect costs based on machine hours is an example of using an activity driver.

---

Definitions:

Flexible Budget

A budget with the capacity to alter in response to shifts in activity volume or level.

Employee Salaries

The total amount paid to employees for their services over a specific period.

Wages

Payments made to employees as compensation for their labor, calculated on an hourly, daily, or piecework basis.

Net Operating Income

Income from a company's everyday business operations, excluding taxes and interest expenses; a key indicator of a company’s financial performance.