Dentlinger Company uses a job-order cost system and had the following data available for 20X2.

-To compute the budgeted factory-overhead rate, the budgeted cost driver is divided into the
A) actual factory overhead.
B) budgeted work-in-process.
C) estimated cost of goods sold.
D) budgeted total overhead.

Question

Dentlinger Company uses a job-order cost system and had the following data available for 20X2.
 
-To compute the budgeted factory-overhead rate, the budgeted cost driver is divided into the
A) actual factory overhead. 
B) budgeted work-in-process. 
C) estimated cost of goods sold. 
D) budgeted total overhead.

Quizplus · Accepted Answer

The budgeted factory-overhead rate is calculated by dividing the estimated or budgeted total overhead by the budgeted cost driver. Dividing by actual factory overhead (A) or budgeted work-in-process (B) would not result in an accurate rate, and estimating cost of goods sold (C) is not relevant to calculating the factory-overhead rate.

Dentlinger Company Uses a Job-Order Cost System and Had the Following