What Is the Formula for the Overhead Recovery Rate Using

question 31

Multiple Choice

What is the formula for the overhead recovery rate using an activity-based costing system?

• A)Overhead cost divided into relevant cost driver
• B)Overhead cost divided by the number of products
• C)Overhead cost divided into labour hours
• D)Overhead cost divided by relevant cost driver

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Definitions:

Productive Efficiency

The production of a good in the least costly way; occurs when production takes place at the output level at which per-unit production costs are minimized.

Marginal Cost

The charge of crafting one more unit of a product or service.

Product Markets

Markets where goods and services produced by businesses are sold to households.

Negative Externalities

These are costs that are suffered by a third party as a result of an economic transaction, which are not reflected in the market price.