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Volume-based Measures Used For Applying Overhead Costs

Question

Volume-based measures may be used for applying overhead costs. When is this approach not satisfactory?

A. Where overhead costs are trivial in amount

B. Where overhead costs are driven by the number of production set-ups

C. Where volume-based measures give the same product cost outcomes as activity-based measures

D. Where there is diversity in the size of production runs and set-up times, and overhead costs are directly proportional to the size of the production runs.


Summary

This multiple choice question belongs to Operations Management and the question discusses about the volume-based measures used for applying overhead costs.

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