Which of the Following Should Not Be Used as the Allocation

question 57

Multiple Choice

Which of the following should not be used as the allocation base in a company that appropriately uses a single plantwide rate?

• A) Sales volume.
• B) Machine hours.
• C) Material costs.
• D) Direct labor cost.

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Definitions:

Percent

A measure or ratio expressed as a fraction of 100.

Patent

A legal right granted by the government to an inventor, granting exclusive use of an invention for a certain period of time, preventing others from making, using, or selling the invention without permission.

Transfer Price

The price at which goods and services are transferred between departments or divisions within the same company or between related entities.

Unused Capacity

The resources and capabilities that a company has available but is not currently utilizing to their full extent, often an opportunity for increased production.