Direct Labor Hours Is an Appropriate Cost Driver When

question 12

Multiple Choice

Direct labor hours is an appropriate cost driver when:

• A) production is labor-intensive.
• B) overhead costs increase.
• C) production is automated.
• D) all of these answers are correct.

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Definitions:

MACRS 3-Year Class

A category under the Modified Accelerated Cost Recovery System (MACRS) for depreciating certain types of business property over three years.

Amortized

Amortization is the process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.

Residual Value

The estimated value of an asset at the end of its useful life.

Lease Terms

The conditions under which a lease will be granted, including duration, payment intervals, fees, restrictions, and penalties.