If Direct Labor-Hours Is Used as the Allocation Base in a Job-Order

question 117

True/False

If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor hours, then jobs with high direct labor requirements will tend to be undercosted relative to jobs with low direct labor requirements.

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Definitions:

Inefficient Market

A market where securities' prices do not fully reflect all available information, leading to potential for abnormal returns.

Standard Deviation

A statistic that measures the dispersion or spread of a set of data points around their mean.

Level Of Risk

A measure of the potential for loss in an investment or business situation.

Variance

Variance is a statistical measurement that describes the spread of numbers in a data set, indicating how much the numbers differ from the average value.