Unit-level cost drivers are most appropriate as an overhead assignment base when:
A)several complex products are manufactured
B)only one product is manufactured
C)direct labor costs are low
D)factories produce a varied mix of products

Question

Quizplus · Accepted Answer

Unit-level cost drivers are most suitable when only one product is manufactured. This is because the cost of producing each unit of the product can be more accurately determined by assigning overhead costs to each unit. When several complex products are manufactured or factories produce a varied mix of products, it may be difficult to allocate overhead costs to specific products. Additionally, when direct labor costs are low, it may be more appropriate to use other cost drivers, such as machine-hours or activity-based costing, to allocate overhead costs.

Unit-Level Cost Drivers Are Most Appropriate as an Overhead Assignment