The standard fixed overhead rate is often calculated as
A) budgeted fixed overhead divided by practical capacity measured in standard hours.
B) actual fixed overhead divided by practical capacity measured in standard hours.
C) budgeted fixed overhead divided by actual hours.
D) budgeted fixed overhead divided by practical capacity measured in actual hours.
E) None of these.

Question

Quizplus · Accepted Answer

The standard fixed overhead rate is typically calculated by dividing the budgeted fixed overhead (the amount expected to be incurred during a period) by the practical capacity of the production resources (usually measured in standard hours). This provides a per hour rate that can be used to allocate fixed overhead costs to products or cost centers based on their usage of production resources.

The Standard Fixed Overhead Rate Is Often Calculated as