Asked by Chris Mckibben on May 20, 2024
Verified
Guerra Electronics manufactures a variety of electronic gadgets for use in the home. Which of the following would probably be the most accurate measure of activity to use for allocating the costs of inspecting the finished products at Guerra?
A) Machine-hours
B) Direct labor-hours
C) Inspection time
D) Number of inspections
Allocating Costs
The process of assigning indirect expenses to different departments, products, or projects based on relevant criteria.
Measure Of Activity
A parameter or unit used to quantify the level of operational or production activity within a specific period.
- Understand the significance of precise activity measurement for the allocation of costs.
Verified Answer
KE
Kylah EssexMay 25, 2024
Final Answer :
C
Explanation :
The most accurate measure of activity to use for allocating the costs of inspecting the finished products would be the inspection time because it directly relates to the cost of the activity. Machine-hours and direct labor-hours may not accurately capture the amount of time spent on inspections, as inspections may take place at different points in the manufacturing process and may not be directly tied to the use of a machine or direct labor. Counting the number of inspections may also not accurately reflect the amount of time and effort required for inspections, as some inspections may be more complex or require more attention than others.
Learning Objectives
- Understand the significance of precise activity measurement for the allocation of costs.
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