Which of the Following Statements About Using a Plantwide Overhead

question 272

Multiple Choice

Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

• A) Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.
• B) Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.
• C) It is often overly simplistic and incorrect to assume that direct labor-hours is a company's only manufacturing overhead cost driver.
• D) The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

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Definitions:

Research Costs

Expenses related to the investigation and exploration of materials, processes, or markets to generate new knowledge.

Development Costs

Expenditures associated with the research and development of a company's products or services, which might be capitalized or expensed depending on the nature of the project and accounting standards.

Intangible Assets

Assets that do not have physical substance but are identifiable and provide future economic benefits, such as patents, trademarks, and copyrights.

Physical Substance

This refers to the tangible nature of an asset, meaning it can be seen, touched, or physically measured.