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Which method of allocation probably best estimates actual overhead costs used? Why?

a) Single direct labor-hours cost driver because it is best to allocate total costs uniformly to individual jobs.

b) Single direct labor-hours cost driver because it is easiest to analyze and interpret.

c) Three activity-cost drivers because they best reflect the relative consumption of resources.

d) Three activity-cost drivers because product costs can be significantly cross-subsidized.

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