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    "Sometimes direct-labor cost is the best cost-allocation base for overhead application even if wage rates vary within a department." Do you agree or disagree? Explain. Identify two other cost allocation bases and give examples of how they may be used to allocate overhead.

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    Solution Preview

    Yes, sometimes direct labor cost is the best allocation base when overhead resources are related to DL costs. For instance, if the overhead is vacation pay or 401(k) matching that is sensitive to labor rates, then the costs, rather than just the hours, is ...

    Solution Summary

    Response agrees and gives two other allocation bases, indicating when each might be used.