In the budgeted fixed overhead rate, the number of machine hours are considered as _________?
Correct answer: C. denominator level
- A. fixed level
- B. numerator level
- C. denominator level
- D. variable level
Explanation
The budgeted fixed-overhead rate is calculated using budgeted fixed overhead divided by the denominator activity level, such as budgeted machine hours. Therefore, machine hours are considered the denominator level.
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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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