Which of the following would be the best allocation base for the direct materials used by workers to assemble products?
A)Square feet of space occupied.
B)Number of new products.
C)Quantity of materials used.
D)Number of machine setups.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Allocating the cost of direct materials based on the quantity used is the most accurate allocation base as it directly ties the cost to the production of the product. Other allocation bases such as square feet or number of products do not necessarily reflect the actual use of materials. Machine setups may also not be an accurate allocation base if multiple products are produced during one setup.

Which of the Following Would Be the Best Allocation Base