Direct Labor Hours Is an Appropriate Cost Driver When

question 12

Multiple Choice

Direct labor hours is an appropriate cost driver when:

• A) production is labor-intensive.
• B) overhead costs increase.
• C) production is automated.
• D) all of these answers are correct.

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Definitions:

Total Expenditures

The sum total of all spending, often referenced in the context of consumer, government, or business expenditures.

Rational Consumer

An economic theory assumption about consumers behaving logically, making choices to maximize their utility or satisfaction given their budget constraints.

Entire Income

The total earnings or revenue generated by an individual or entity from all sources before any deductions.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, with all other factors being held constant.