Which of the Following Would Probably Be the Least Appropriate

question 134

Multiple Choice

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves?

• A)Machine-hours
• B)Power consumption
• C)Direct labor-hours
• D)Machine setups

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Definitions:

Variable Costs

Costs that vary in proportion to the level of activity or volume of production in a business.

Break-even Point

The break-even point is the point at which total costs and total revenues are equal, meaning the business is neither making a profit nor a loss.

Variable Costs

Costs that change directly and proportionately with the level of production or business activity.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.