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

---

Definitions:

Working Capital

The variance between a firm's current holdings and debts, reflecting its short-term economic condition and efficiency in procedures.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.

Sales On Account

Transactions where revenue is recorded when sales are made, but payment is received at a later date.

Cost Of Goods Sold

The total cost of goods that have been sold during a specific period, including the cost of materials, labor, and overhead.