During the last 10 months, the Arcade Corporation has had the following indirect costs.

The Arcade Corporation is trying to determine a good cost driver for the indirect costs.

The usage of two potential cost drivers, direct labor hours and machine hours, has also been recorded over the last 10 months.

Which cost driver is most closely associated with the indirect costs?

Transcribed Image Text:

Month Indirect Costs Direct Labor Hours Machine Hours 1 $3,200,000 5,000 3,000 2 3,600,000 5,100 3,400 3 3,800,000 5,400 3,500 4 3,500,000 5,200 3,300 5 2,800,000 5,000 2,900 19 6 4,000,000 5,500 4,000 7 3,500,000 5,100 3,400 8 3,700,000 5,400 3,800 9 4,200,000 5,700 4,200 10 2,500,000 4,500 2,600