Final answer:
In a highly automated manufacturing company, the least appropriate allocation base for allocating overhead would be direct labor hours or direct labor cost. Instead, a more appropriate allocation base would be the number of machine hours or machine usage.
Step-by-step explanation:
In a highly automated (capital-intensive) manufacturing company, the least appropriate allocation base for allocating overhead would be direct labor hours or direct labor cost. This is because in a capital-intensive company, labor plays a smaller role in the production process compared to machines.
For example, if a company has a high level of automation with machines performing most of the production tasks, the number of direct labor hours or the cost of labor would not accurately reflect the consumption of overhead resources. Instead, a more appropriate allocation base would be the number of machine hours or machine usage.
By allocating overhead based on machine hours, the company can distribute costs more accurately and account for the actual utilization of capital-intensive resources, which is the primary driver of overhead expenses in a highly automated manufacturing company.