An approach which yields the benefits of normal costing and the actual manufacturing overhead is classified as ____________?
Correct answer: D. adjusted allocation rate approachFinance
- A. unadjusted allocation rate approach
- B. adjusted budget rate approach
- C. unadjusted budget rate approach
- D. adjusted allocation rate approachFinance
Explanation
The adjusted allocation rate approach combines normal costing's systematic allocation with the use of actual manufacturing overhead, usually through a year-end adjustment. This distinguishes it from an unadjusted approach, which leaves allocated overhead unchanged.
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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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