If James Ingram is a labour intensive company,and more overhead costs are caused by increasingly complex products that require more senior labour staff,what overhead driver would you suggest?

Question

Quizplus · Accepted Answer

Since James Ingram is a labour intensive company, the best overhead driver would be one that is closely related to labour costs. Direct labour cost is a good choice as it measures the actual cost of the labour used in producing products. The more senior labour staff required for increasingly complex products will add to the direct labour cost and hence, this overhead driver will reflect the changes in overhead costs accurately.

If James Ingram Is a Labour Intensive Company,and More Overhead