The correct answer is: B. adjusted budget rate approach
An adjusted budget rate approach is a method of allocating manufacturing overhead costs to products that uses a budget rate that is adjusted for actual production volume. This approach yields the benefits of both normal costing and actual costing.
With normal costing, manufacturing overhead costs are allocated to products based on a predetermined overhead rate. This rate is typically based on the estimated costs of manufacturing overhead for the period divided by the estimated production volume for the period.
With actual costing, manufacturing overhead costs are allocated to products based on the actual costs of manufacturing overhead incurred during the period. This approach is more accurate than normal costing, but it is also more complex and time-consuming.
The adjusted budget rate approach combines the benefits of normal costing and actual costing. It uses a predetermined overhead rate that is adjusted for actual production volume. This approach is more accurate than normal costing, but it is not as complex or time-consuming as actual costing.
The unadjusted budget rate approach is a method of allocating manufacturing overhead costs to products that uses a predetermined overhead rate that is not adjusted for actual production volume. This approach is simpler than the adjusted budget rate approach, but it is not as accurate.
The unadjusted allocation rate approach is a method of allocating manufacturing overhead costs to products that uses a predetermined overhead rate that is not adjusted for anything. This approach is the simplest of all, but it is also the least accurate.