Traditional vs$.$ Activity$-$Based Costing: Traditional Costing Systems and Illustration of a Traditional Costing System $-$ Knowledge Check

Knowledge Check

Direct labor is an appropriate basis for allocating overhead under which of the following conditions? $($Select all that apply.$)$

There is a high correlation between direct labor and changes in the amount of overhead costs.

Direct labor constitutes a significant part of total product cost.

here is no correlation between direct labor and overhead costs.

The manufacturing environment is mostly automated.