Mary runs a florist store and predominantly incurs overhead costs that are proportional to the amount of effort put in by her staff members.These staff members generally receive the same pay rates.Which of the four drivers below would you consider best for allocating her overhead costs?

Question

Quizplus · Accepted Answer

Direct labour hours would be the best driver for allocating overhead costs as the overhead costs are proportional to the amount of effort put in by the staff members, who are receiving the same pay rates. Direct labour hours directly measure the amount of effort put in by the staff, and thus would be the most accurate driver for allocating overhead costs in this scenario.

Mary Runs a Florist Store and Predominantly Incurs Overhead Costs