Your client, Jones Brothers, wants to use a plantwide overhead rate based on direct labor. Which of the following can you tell him about this strategy?

Multiple Choice

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

Using a plantwide overhead rate based on direct labor costs will ensure that direct labor costs will be 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.

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.