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Cost Accounting

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40. Which of the following would probably be the most accurate measure of activity to use for allocating the costs associated with a factory's purchasing department?
Why???
A) Machine-hours.
B) Direct labor-hours.
C) Number of orders processed.
D) Cost of materials purchased.

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Solution Summary

The solution explains how to decide the cost base to use for cost allocation.

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C - Number of orders processed

The activity should be such that the costs incurred are related to the ...

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