Which Method of Allocation Probably Best Estimates Actual Overhead Costs

question 160

Multiple Choice

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

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

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Definitions:

Doubter

A person inclined to skepticism or lacking in conviction, often questioning the truth or reliability of something.

Champion

An individual who passionately supports, promotes, or defends a particular cause, idea, or project, often inspiring others to do the same.

Convert

To change something into a different form or properties, typically to serve a different function or purpose.

Defector

An individual who renounces their allegiance to one group in favor of another; often used in political, military, or social contexts.