alleryStart learning →What does the labour cost percentage rate need for proper results?
ARising wage rates
BMixed skill levels
CSteady pay, equal skill
DPiece rate pay only
Answer & Solution
Correct answer: C. Steady pay, equal skill
If wage rates or skills differ, equal labour cost would not mean equal use of overhead, so the rate misleads.
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Related questions
In the CIMA description of ABC, activities are assigned to what?In which journal did Cooper and Kaplan publish ABC articles from 1988?Drucker said ABC also records the cost of what?What limits the use of ABC, especially in services?What is a danger of ABC, like other cost allocation approaches?The chief executive's salary stays unassigned in ABC. What are such costs termed?Why did indirect costs rise relative to direct costs in modern factories?How does ABC assign costs, rather than using broad arbitrary percentages?