The budgeted factory-overhead rate is computed as _____.
A)actual factory overhead / actual production in units
B)actual factory overhead / actual cost driver activity
C)budgeted total overhead / actual cost driver activity
D)budgeted total overhead / budgeted cost driver

Question

Quizplus · Accepted Answer

The budgeted factory-overhead rate is computed by dividing the budgeted total overhead by the budgeted cost driver. Choice A is incorrect because it uses actual figures instead of budgeted figures. Choice B is incorrect because it uses actual cost driver activity instead of budgeted activity. Choice C is incorrect because it uses actual cost driver activity again instead of budgeted activity.

The Budgeted Factory-Overhead Rate Is Computed as _____