(Appendix 11A)In a standard costing system where the denominator activity for the predetermined overhead rate is labor-hours, overhead costs are applied to work in process on the basis of the standard labor-hours allowed for the actual output.

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In a standard costing system with labor-hours as the denominator activity, overhead costs are applied to work in process based on the standard labor-hours allowed for the actual output. This is because the predetermined overhead rate is calculated by dividing total estimated overhead costs by the estimated total labor-hours for the coming period.

(Appendix 11A)In a Standard Costing System Where the Denominator Activity