For a pharmaceutical company, the most suitable base for allocating research and development costs to the finished products would be:
A)direct labor hours.
B)cost of raw materials purchased.
C)number of new patents filed.
D)number of set ups.

Question

Quizplus · Accepted Answer

Allocating research and development costs based on the number of new patents filed is the most suitable method for a pharmaceutical company as it directly relates to the development of finished products. Direct labor hours and cost of raw materials purchased may relate to the production of finished products, but not necessarily to the research and development phase. The number of set ups is also not necessarily relevant to research and development costs.

For a Pharmaceutical Company, the Most Suitable Base for Allocating