In master budgeting, the cost drivers for manufacturing overhead costs are ___________?
Correct answer: D. both a and b
- A. direct manufacturing labor-hours
- B. setup labor-hours
- C. budgeted labor-hours
- D. both a and b
Explanation
Manufacturing overhead may be driven by direct labour-hours and by setup labour-hours, depending on the activities causing the overhead. Therefore both listed drivers can be used in master-budget planning.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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