Which of the Following Provides an Explanation of Why the Variable

question 80

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)The behavior of costs,used for computing variable overhead rate and fixed overhead rate,differs.

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Definitions:

Option

A financial derivative that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at an agreed-upon price within a specific timeframe.

Exercised

In financial terms, refers to the act of utilizing the rights provided by a derivative contract, such as executing a buy or sell order under the terms of an option contract.

American Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a specified price within a certain time period.

Fixed Price

A pricing strategy where the cost of goods or services is set and does not fluctuate with changes in the market or inventory costs.