Which of These Possible Bases for Allocating Overhead Costs Is

question 35

Multiple Choice

Which of these possible bases for allocating overhead costs is most commonly used in practice?

• A) Direct labour cost.
• B) Direct labour hours.
• C) Machine hours.
• D) Units produced.

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Definitions:

Total Variable Costs

The sum of all costs that vary with output level, including materials, labor, and other expenses that change with production volume.

Techniques of Production

The methods and processes used by firms to produce goods and services efficiently.

Price of Output

The amount of money that a firm receives from the sale of goods and services it produces.

Price of Inputs

The cost associated with the resources used in the production of goods and services.