Case 5-19 - labor cost and number of units produced. The...

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CASE 5-19 Which measure of activity – number of units produced or paid days – should be used as the activity base for explaining direct labor cost? Explain. The best measurement to explain direct labor cost would have to be paid days. Direct labor costs are fixed to how many units are produced during the month. That means that they get paid hourly, so if they are busy or not, they will be getting paid. When you look between direct labor costs and number of paid days; there is a much stronger correlation than direct
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Unformatted text preview: labor cost and number of units produced. The variety, in direct labor cost, seem; to be because the number of days pay in a month vary and do not correlate with the amount of units that are made. The days paid is able to be counted more easily than the exact numbers of units produced. That is because days are known, while the making of units can change for any number of reasons....
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Case 5-19 - labor cost and number of units produced. The...

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