Which of the Following Provides an Explanation of Why the Variable

question 103

Multiple Choice

Which of the following provides an explanation of why the variable overhead rate is separated from the fixed overhead rate in standard costing?

• A) There is no justifiable reason; their separation is merely to simplify entries.
• B) Both calculations divide by the same direct labor hours, but the numerator is different for each calculation.
• C) The variable overhead rate is calculated using actual direct labor hours, whereas the fixed overhead rate is calculated using normal capacity direct labor hours.
• D) Different application bases are generally appropriate.

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Definitions:

Dairy Farmers

Individuals or entities engaged in the production of milk and possibly other dairy products from livestock such as cows.

Price Variability

The extent to which prices fluctuate over time, affecting the stability of markets and economic planning for both producers and consumers.

Farming Resources

The inputs required for agricultural production, including land, labor, machinery, and capital.

Price Subsidies

Financial assistance provided by the government to lower the cost of goods or services.