The fixed factory overhead application rate (for product-costing purposes) is equal to:
A) The denominator activity divided by budgeted fixed factory overhead.
B) The denominator activity divided by budgeted variable factory overhead.
C) Budgeted variable factory overhead divided by denominator activity.
D) Budgeted fixed factory overhead divided by budgeted variable factory overhead.
E) Budgeted fixed factory overhead divided by denominator activity.

Question

Quizplus · Accepted Answer

The fixed factory overhead application rate is determined by dividing the budgeted fixed factory overhead by the denominator activity for the period. Option E is the only choice that reflects this calculation.

The Fixed Factory Overhead Application Rate (For Product-Costing Purposes) Is