In a Normal Costing System, the Overhead Allocation Rate Is

question 131

Multiple Choice

In a normal costing system, the overhead allocation rate is calculated as

• A) Estimated overhead cost / estimated quantity of allocation base
• B) Estimated overhead cost / actual quantity of allocation base
• C) Actual overhead cost / actual quantity of allocation base
• D) Actual overhead cost / estimated quantity of allocation base

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as the production volume varies.

Total Product

The overall quantity of output that a firm produces, typically measured within a specific time period under given levels of input.

Marginal Cost

The additional cost incurred in the production of one more unit of a good or service.

Marginal Product

The additional output that is produced by employing one more unit of a particular input, while holding other inputs constant.