The fixed rate of calculation is based on the _________?
Correct answer: C. capacity available
- A. capacity used
- B. capacity utilization
- C. capacity available
- D. downward demand
Explanation
A fixed allocation rate is calculated using the capacity level selected as the denominator, commonly the available or practical capacity. Capacity used is the actual activity level, not the basis for setting the fixed 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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