Tutors-R-Us provides academic enrichment and review activities for high school students in 4 subject areas: English, mathematics, science, and history. In November 2010, the firm's information system produced the following data: Regardless of subject area, clients pay $50 per hour for tutoring services. Costs associated with the Tutors-R-Us operations for November 2010 included:
Which of the following is the most logical allocation base for facility rent if the relevant cost object is a subject area (product line) ?
Definitions:
Traditional Costing
An accounting method that applies indirect costs to products based on a predetermined overhead rate, typically simpler than activity-based costing.
Activity-Based Costing
A costing methodology that assigns the costs of resources to products or services based on activities and processes involved in their production.
Traditional Costing Method
A cost accounting method that assigns overhead costs to products based on a predetermined overhead rate.
Direct Labor-Hours
A measure representing the total hours worked by employees directly involved in the production of goods or services.
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