In a standard cost system,overhead is applied to production on a basis of:
A) the denominator hours chosen for the period.
B) the budgeted hours for the normal production level of activity.
C) the actual hours required to complete the output of the period.
D) the standard hours allowed to complete the output of the perioD.
Standard costing uses standard hours,not actual or budgeteD.

Question

Quizplus · Accepted Answer

In a standard cost system, overhead is applied based on the standard hours allowed to complete the output of the period. This means that a predetermined standard overhead rate is established, which is then applied to the standard hours allowed for the actual output. This helps to ensure that the overhead costs are allocated based on the expected level of efficiency and productivity, rather than the actual level of activity.

In a Standard Cost System,overhead Is Applied to Production on a Basis