The Denominator in an Overhead Allocation Rate for Normal Costing

question 96

Multiple Choice

The denominator in an overhead allocation rate for normal costing is:

• A) Actual overhead costs
• B) Estimated activity level
• C) Estimated overhead costs
• D) Actual activity level

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Definitions:

Equity Method

A method of accounting for investments reflecting the investor's share of the earnings or losses of the investee in the investor's financial statements.

Contractual Agreement

A legally binding agreement between two or more parties that outlines the terms and conditions of an arrangement.

Financial Statements

Reports that summarize the financial performance and financial position of a company, including the balance sheet, income statement, and cash flow statement.

Intercompany Sales

Transactions of goods or services between divisions, subsidiaries, or affiliated companies within the same conglomerate.