(Appendix 11A)A company has a standard cost system in which fixed and variable manufacturing overhead costs are applied to products on the basis of direct labor-hours.The company's choice of the denominator level of activity has no effect on the variable portion of the predetermined overhead rate.

Question

Quizplus · Accepted Answer

The choice of denominator level of activity only affects the fixed portion of the predetermined overhead rate, not the variable portion. Variable overhead costs are directly proportional to the level of activity and therefore remain consistent regardless of the denominator level chosen.

(Appendix 11A)A Company Has a Standard Cost System in Which