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Author Question: What is the primary drawback to using a volume-driven base, such as direct labor or machine hours, ... (Read 95 times)

CQXA

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What is the primary drawback to using a volume-driven base, such as direct labor or machine hours, to apply overhead to products in a traditional cost accounting system?
◦ The cost accountant may not fully understand how to track direct labor or machine hours.
◦ It is difficult for an AIS to incorporate such a measurement into its system.
◦ It is difficult for an ERP to incorporate such a measurement into its integrated system.
◦ Many overhead costs are incorrectly allocated to products since they do not vary with production volume.


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Marked as best answer by CQXA on Apr 8, 2019

cat123

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