Which of the following describes the allocation base for allocating manufacturing overhead costs?

Question

Quizplus · Accepted Answer

The allocation base for allocating manufacturing overhead costs is typically the primary cost driver of indirect manufacturing costs, such as machine hours, direct labor hours, or materials used. This is because these indirect costs are often incurred as a result of the amount of resources consumed by specific production activities, and therefore can be closely tied to the level of activity within these cost driver measures. Option B is incorrect as it refers to the estimated amount of manufacturing overhead costs in a year, which may be relevant to budgeting or forecasting, but is not directly related to allocating these costs. Option C is incorrect as it refers to allocating direct labor costs, which is a separate process from allocating manufacturing overhead costs. Option D is incorrect as it does not relate to the concept of an allocation base for manufacturing overhead costs.

Which of the Following Describes the Allocation Base for Allocating