When public accounting firms apply indirect costs to audit engagements,they use ________ or ________ as the cost driver.
A) direct labor cost; equipment usage
B) direct labor cost; direct labor hours
C) hours of equipment use; hours of computer use
D) traveling costs; hours of clerical assistance

Question

Quizplus · Accepted Answer

When public accounting firms apply indirect costs to audit engagements, they typically use direct labor cost or direct labor hours as the cost driver. This allows for a more accurate allocation of indirect costs based on the amount of time and effort expended by the audit team during the engagement.

When Public Accounting Firms Apply Indirect Costs to Audit Engagements,they