Question

A company may choose to use budgeted rates to allocate direct labor accounts if direct labor costs are difficult to trace to jobs as they are completed.

a-true
b-false

Answer 1

A company may choose to use budgeted rates to allocate direct labor costs if tracing them to specific jobs is difficult.

The statement is true. A company may choose to use budgeted rates to allocate direct labor costs when it is difficult to trace them to specific jobs as they are completed. Budgeted rates are predetermined rates that are based on an estimate of the total direct labor cost and the total labor hours for a specific period. By using budgeted rates, the company can allocate labor costs fairly and accurately to different jobs or departments.