Why is labor a poor base for allocating overhead in many companies

1 why is direct labor a poor base for allocating overhead in many companies in what situation would it be a strong and better way to allocate overhead what bases do you feel are the most commonly used by most large companies explain 2. This is the end of the preview sign up to access the rest of the document unformatted text preview: why are there two stages of allocation in activity-based costing 7-7 why is the first stage of the allocation process in activity-based costing often based on interviews 7-8 when activity-based. Why is direct labor a poor base for allocating overhead in 2 what types of costs should not be assigned to products in an 3 why are there two stages of allocation in activity-based 4.

Why is direct labor a poor base for allocating overhead in many companies in what situation would it be a strong and - answered by a verified business tutor we use cookies to give you the best possible experience on our website. Why is labor a poor base for allocating overhead in many companies overhead allocation [pic] overhead allocation overview in many businesses, the cost of overhead is substantially greater than direct costs, so the cost accountant must expend considerable attention on the proper method of allocating overhead to inventory.

Hence, direct labor is a poor base now a days for allocating overheads the direct labor would be a stronger and better way to allocate costs in traditional operations where direct labor is the major cost driver. Direct labor is a poor base for allocating overhead in many companies because as technology improved many tasks that were previously done by direct laborers were being done by automated equipment, which is a component of overhead. Solutions for chapter 8 problem 2q problem 2q: why is direct labor a poor base for allocating overhead in many companies 698 step-by-step solutions solved by professors & experts ios, android, & web get solutions looking for the textbook. Why is direct labor a poor base for allocating overhead in many companies direct labor is a poor base for allocating overhead in many companies because it is being replaced by automated equipment, which is a component of overhead relying on traditional allocation bases posed the risk of distorting the unit product costs that are used for decision-making purposes (289) 4.

Unformatted text preview: why are there two stages of allocation in activity-based costing 7-7 why is the first stage of the allocation process in activity-based costing often based on interviews 7-8 when activity-based costing is used, why do manufacturing overhead costs often shift from high-volume products to low-volume products 7-9 how can the activity rates (ie, cost per activity. Solutions for chapter 7 problem 2q problem 2q: why is direct labor a poor base for allocating overhead in many companies 665 step-by-step solutions solved by professors & experts ios, android, & web get solutions looking for the textbook.

Why is labor a poor base for allocating overhead in many companies

When direct labor is used an allocation base for overhead, it is implicitly assumed that overhead cost is directly proportional to direct labor when cost systems were originally developed in the 1800s, this assumption may have been reasonably accurate.

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  • Direct labor is a poor base for allocating overhead in many companies because it is being replaced by automated equipment, which is a component of overhead relying on traditional allocation bases posed the risk of distorting the unit product costs that are used for decision-making purposes.

Why is direct labor a poor base for allocating overhead in many companies there is no longer a direct link between direct labor and overhead direct labor is often replaced by machines and decrease in direct labor leads to an increase in overhead. 8–2 why is direct labor a poor base for allocating overhead in many companies 8–3 why are overhead rates in activity-based costing based on the level of activity at capacity rather than on the budgeted level of activity 8–4 why is top management support crucial when attempting to implement an activity-based costing system 8–5 what.

why is labor a poor base for allocating overhead in many companies Why is direct labor poor base for allocating overhead in many companies there is no direct link between the level of direct labor and overhead overhead cost driven by factors such as product diversity and complexity as well as by volume, for which direct labor has served as a convenient measure.
Why is labor a poor base for allocating overhead in many companies
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