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.