During 2013, the Kemp Construction Company built 23 custom homes that ranged in

Question

During 2013, the Kemp Construction Company built 23 custom homes that ranged in size from 2,500 square feet to 8,000 square feet. One home was completed each month during January, February, and March. Three homes were completed during April and May. Two homes were completed during each of the months from June through December. Based upon this information, the most appropriate allocation base (i.e., cost driver) for the assignment of indirect overhead costs to each house would be the: Number of months in the year. Size of the home. Number of homes built during the month. Number of homes built during the year.

Explanation / Answer

indirect overhead should be allocated based on size of home.

So, second option is correct

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