The fixed-overhead rate is determined by dividing the budgeted fixed manufacturing overhead by_____.
A)expected volume of the cost driver
B)actual volume of production
C)budgeted variable manufacturing overhead
D)the number of units sold

Question

Quizplus · Accepted Answer

The fixed-overhead rate is determined by dividing the budgeted fixed manufacturing overhead by expected volume of the cost driver. This cost driver is usually the number of units to be produced or the number of labor hours to be used. By using the expected volume of the cost driver, the fixed overhead rate can be calculated in advance and used for budgeting purposes.

The Fixed-Overhead Rate Is Determined by Dividing the Budgeted Fixed