Which of the Following Would Likely Be a Suitable Cost

question 74

Multiple Choice

Which of the following would likely be a suitable cost driver for the amount of direct materials used?

• A) The number of units sold.
• B) The number of direct labor hours worked.
• C) The number of machine hours worked.
• D) The number of units produced.
• E) The number of employees working in the factory.

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Definitions:

Inventory Period

The average time it takes for a company to turn its inventory into sales, indicating how quickly products are sold.

Obsolete Inventory

Items in stock that are out of date or no longer in demand, often leading to reduced value or write-offs.

Accounts Payable Period

The average number of days it takes for a business to pay its invoices from suppliers, reflecting its payment policy efficiency.

Cash Cycle

The time it takes for a company to convert its investments in inventory back into cash.