If the budgeted fixed cost is $55000 and budgeted fixed cost is $55 per unit, then budgeted denominator level is __________?
Correct answer: C. 1000 units
- A. 2500 units
- B. 2000 units
- C. 1000 units
- D. 1500 units
Explanation
The budgeted denominator level is calculated as budgeted fixed cost divided by fixed cost per unit: $55,000 ÷ $55 = 1,000 units. This is the capacity level used to compute the fixed overhead rate.
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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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