If the budgeted annual indirect cost is $60000, budgeted annual quantity of cost allocation base is $3600, then budgeted indirect cost rate will be __________?
Correct answer: B. 16.67 per piece
- A. 15.67 per piece
- B. 16.67 per piece
- C. 14.67 per piece
- D. 13.67 per piece
Explanation
The budgeted indirect cost rate is calculated as budgeted indirect cost divided by the budgeted allocation base: $60,000 ÷ 3,600 = $16.67 per unit. Rounding to two decimal places gives option b.
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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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