Which of the following activity levels has the advantage of using the same activity level year after year and, in turn, producing less fluctuation from year to year in the assignment of per-unit overhead cost?
A)Actual activity level
B)Normal activity level
C)Theoretical activity level
D)Practical activity level

Question

Quizplus · Accepted Answer

Normal activity level is designed to represent a level of activity that is expected for the upcoming period. It is practical to use the same level year after year, as it is based on a reasonable estimate of the expected activity. This results in less fluctuation from year to year in the assignment of per-unit overhead cost. Actual activity level may vary from year to year, and theoretical and practical activity levels may not accurately reflect the expected level of activity.

Which of the Following Activity Levels Has the Advantage of Using