A department that is capital-intensive most likely would use a predetermined departmental overhead rate based on which of the following activity bases?
A)units of direct material used
B)direct labor hours
C)direct labor cost
D)machine hours

Question

Quizplus · Accepted Answer

A department that is capital-intensive would likely use machine hours as the activity base for calculating their predetermined departmental overhead rate. This is because the cost of the equipment and machinery is likely the largest expense for the department and it is used in a direct and measurable way in the production process. Therefore, using machine hours as the activity base provides a more accurate reflection of the department's usage of its most significant resource.

A Department That Is Capital-Intensive Most Likely Would Use a Predetermined