When calculating an estimated fixed production cost overhead allocation rate, accountants choose the:
A)Allocation base to use as the denominator
B)Allocation base to use as the numerator
C)Allocation base to use as the rate
D)Allocation base that minimizes total fixed production overhead

Question

Quizplus · Accepted Answer

Accountants choose the allocation base to use as the denominator when calculating an estimated fixed production cost overhead allocation rate. The rate is typically calculated by dividing the total estimated fixed production costs by the chosen allocation base, such as machine hours or labor hours.

When Calculating an Estimated Fixed Production Cost Overhead Allocation Rate