A more accurate allocation of manufacturing overhead and product costing can take place when costs are assigned on the basis of:

Question

Quizplus · Accepted Answer

Cost drivers are the best choice for assigning manufacturing overhead and product costing because they are the factors that cause costs. Cost drivers include machine hours, setups, and other activities that consume resources. By assigning costs based on cost drivers, an organization can better understand the underlying causes of manufacturing costs and make more informed decisions about pricing, production, and resource allocation. This approach ensures that costs are allocated more accurately and can result in better cost management and higher profitability.

A More Accurate Allocation of Manufacturing Overhead and Product Costing