Percentage of direct material cost method of overhead absorption is suitable :

CS Executive · Cost and Management Accounting · PYQS · June 2018
Percentage of direct material cost method of overhead absorption is suitable :
(A) If sub-standard material is used in production process.
(B) If material prices are not stable.
(C) If material is a smaller part of the cost of units made in the cost Centre.
(D) If material is a major part of the cost of units made in the cost Centre.

Answer & Explanation:

Correct Answer: Option (D)

Official answer key: (D).

Topics: Cost and Management Accounting

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