[amp_mcq option1=”Direct material cost method” option2=”Prime cost method” option3=”Labour hour method” option4=”Machine hour method” correct=”option3″]<\/p>\n
The correct answer is C. Labour hour method.<\/p>\n
In a labour oriented manufacturing industry, the cost of labour is the most significant cost. Therefore, the labour hour method is the most suitable method of overhead absorption. This method allocates overhead costs to products based on the number of labour hours used to produce them.<\/p>\n
The direct material cost method is not suitable because it does not take into account the cost of labour. The prime cost method is not suitable because it does not take into account the cost of overhead. The machine hour method is not suitable because it does not take into account the cost of labour.<\/p>\n
The labour hour method is the most accurate method of overhead absorption because it takes into account the cost of labour, which is the most significant cost in a labour oriented manufacturing industry.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Direct material cost method” option2=”Prime cost method” option3=”Labour hour method” option4=”Machine hour method” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-57058","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n