Which of the Following Statements About the Use of Direct

Multiple Choice

Which of the following statements about the use of direct labor as a cost driver is false?

A) Direct labor is the most commonly used cost driver when calculating a predetermined overhead rate.
B) Direct labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.
C) Direct labor is an inappropriate cost driver to use if a company is highly automated.
D) If direct labor is a good cost driver, increases in direct labor are matched with increases in manufacturing overhead.
E) Companies can use either direct labor cost or direct labor hours as a cost driver.