Which of the following would likely be the most appropriate cost driver to allocate machinery set-up costs to products?
A)Machine hours
B)Direct labor hours
C)Number of production runs
D)Repair work orders

Question

Quizplus · Accepted Answer

Machinery set-up costs are costs associated with preparing the machinery for production runs. Therefore, the most appropriate cost driver would be the number of production runs. This is because the set-up costs would be incurred each time the machinery is prepared for a new production run. Machine hours and direct labor hours would not be appropriate as they do not directly relate to the set-up process. Repair work orders would be associated with maintenance costs rather than set-up costs.

Which of the Following Would Likely Be the Most Appropriate