Which of the following statements about using a plantwide overhead rate based on direct labor is correct?

Multiple Choice

• Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be correctly traced to jobs.

• The labor theory of value ensures that using a plantwide overhead rate based on direct labor will do a reasonably good job of assigning overhead costs to jobs.

• Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs.

• It is often overly simplistic and incorrect to assume that direct labor-hours is a companys only manufacturing overhead cost driver.