Choosing Direct-Labor Cost Rather Than Direct-Labor Hours as a Cost

question 157

Multiple Choice

Choosing direct-labor cost rather than direct-labor hours as a cost driver for overhead implies that _____.

• A)higher paid employees use proportionally more support cost
• B)higher paid employees use proportionally less support cost
• C)direct labor cost data is easier to obtain
• D)direct labor hour data is easier to obtain

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Definitions:

Disposable Income

The net financial position of households for spending and saving, after accounting for income taxes.

Consumption

Consumption encompasses the acquisition and use of goods and services by households to satisfy their needs and wants.

Induced Consumption

Consumer spending that is influenced by changes in income, differentiating from autonomous consumption which does not vary with income.

Disposable Income

The liquidity households have for spending and saving, after income taxes have been deducted.