A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are difficult to trace to jobs as they are completed.

Question

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If direct labor costs are difficult to trace to jobs as they are completed, a company may choose to use budgeted rates to allocate those costs to jobs. This allows for a more accurate allocation of costs without the need for constantly tracking and tracing individual labor costs.

A Company May Choose to Use Budgeted Rates to Allocate