Some Companies Classify Labour Fringe Benefits for Direct Labour Workers

question 89

True/False

Some companies classify labour fringe benefits for direct labour workers as part of the direct labour cost and some classify these costs as manufacturing overhead.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing a more accurate product cost.

Activity Rates

The costs or rates associated with specific activities used in activity-based costing to allocate expenses to products or services.

Activity Cost Pool

A way to aggregate all indirect costs associated with a particular activity, aiding in more accurate cost allocation.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the manufacturing process or providing service to customers.