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:

Annuity Stream

A series of equal cash flows distributed at regular intervals over a specified period.

Cash Flow Payments

Transactions involving the inflow and outflow of cash, representing the payment of expenses or receipt of income by an individual or business.

Fixed Length

A predetermined or established length or duration that does not change.

Future Value

Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.