An allocation approach, in which all the overhead entries are restated using actual cost rates in place of budgeted rates is called ___________?
Correct answer: B. adjusted allocation rate approach
- A. unadjusted budget rate approach
- B. adjusted allocation rate approach
- C. unadjusted allocation rate approach
- D. adjusted budget rate approach
Explanation
Restating overhead entries using actual rates instead of budgeted rates is the adjusted allocation rate approach. The adjustment removes the difference created by using predetermined rates.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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