Answer the Following Questions Using the Information Below

question 69

Multiple Choice

Answer the following questions using the information below:
Gregory Enterprises has identified three cost pools to allocate overhead costs. The following estimates are provided for the coming year:
The accounting records show the Mossman Job consumed the following resources:

-Which method of allocation probably best estimates actual overhead costs used? Why?

• A)Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs.
• B)Single direct labor-hours cost driver because it is easiest to analyze and interpret.
• C)Three activity-cost drivers because they best reflect the relative consumption of resources.
• D)Three activity-cost drivers because product costs can be significantly cross-subsidized.

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