Which of the following would be the most appropriate basis for allocating the costs of plant insurance which covers equipment theft and damage?
A) Direct labor hours.
B) Value of equipment.
C) Machine hours.
D) Square feet of plant space.

Question

Quizplus · Accepted Answer

Allocating the costs of plant insurance based on the value of equipment is the most appropriate basis because the insurance covers equipment theft and damage. The value of equipment is directly related to the risk of theft and damage, making it a logical basis for allocation. Direct labor hours, machine hours, and square feet of plant space are not as directly related to the risk of theft and damage.

Which of the Following Would Be the Most Appropriate Basis