Direct Labor Hours Would Be the Most Appropriate Cost Allocation

question 12

True/False

Direct labor hours would be the most appropriate cost allocation base for a Machining Department that uses machine robotics extensively.

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Definitions:

Materials Cost

The total expense incurred for materials that are used in the production of goods or services.

Work in Process

Inventory that is in the production process but is not yet completed.

Equivalent Units

Equivalent units are a concept in cost accounting used to apportion costs to partially completed goods, calculating them as if they were finished units.

Conversion Costs

The combined costs of direct labor and manufacturing overheads, representing the costs involved in converting raw materials into finished products.