Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra?

Question

Quizplus · Accepted Answer

The most accurate measure of activity to use for allocating the costs of inspecting the finished products would be the inspection time because it directly relates to the cost of the activity. Machine-hours and direct labor-hours may not accurately capture the amount of time spent on inspections, as inspections may take place at different points in the manufacturing process and may not be directly tied to the use of a machine or direct labor. Counting the number of inspections may also not accurately reflect the amount of time and effort required for inspections, as some inspections may be more complex or require more attention than others.

Guerra Electronics Manufactures a Variety of Electronic Gadgets for Use