Question

Which of the following is not typical of traditional costing systems? Select one: a. Use of a single predetermined overhead rate. b. Use of direct labor hours or direct labor cost to assign overhead. c. Assumption of correlation between direct labor and incurrence of overhead cost. d. Use of multiple cost drivers to allocate overhead. Check

Answer 1

option C is right

Step-by-step explanation:

Given are four methods of allocation of overheads. we have to find which one is not typical of traditional costing systems.

a. Use of a single predetermined overhead rate.

This is a traditional costing system, where a single rate applied for calculating overheads.

b. Use of direct labor hours or direct labor cost to assign overhead.

This also a traditional costing system, which majority of industries adapt.

c. Assumption of correlation between direct labor and incurrence of overhead cost.

This is not a traditional costing system, but modern tool introduced to find the relation between direct labor and overhead cost.

d. Use of multiple cost drivers to allocate overhead.

This is also a traditional system where more than one driver is used.

Hence option C is right