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:

Ratio Scale

A scale of measurement that has a meaningful zero value and allows for comparisons of absolute magnitudes and the computation of ratios.

Measurement

The process or the result of quantifying the characteristics or properties of something, usually by comparing it to a standard.

Defined

Clearly specified or identified.

Data Warehousing

The electronic storage of a large amount of information by a business, in a manner that is secure, reliable, easy to retrieve, and easy to manage.