Digital-Tech Inc., a specialized equipment manufacturer, uses a job order costing system. The overhead is allocated to jobs on the basis of direct…
Digital-Tech Inc., a specialized equipment manufacturer, uses a job order costing system.The overhead is allocated to jobs on the basis of direct labor hours. The overheadrate is now $2,500 per direct labor hour. The design engineer thinks that this is illogical.The design engineer has stated the following:Our accounting system doesn’t make any sense to me. It tells me that every labor hour carriesan additional burden […]