The correct answer is: B. adjusted allocation rate approach
An allocation approach, in which all overhead entries are restated using actual cost rates in place of budgeted rates is called the adjusted allocation rate approach. This approach is used when the budgeted cost rates are not representative of the actual costs incurred. By using actual cost rates, the adjusted allocation rate approach provides a more accurate picture of the costs of production.
The unadjusted budget rate approach is a simpler approach that uses the budgeted cost rates to allocate overhead costs. This approach is less accurate than the adjusted allocation rate approach, but it is easier to use.
The unadjusted allocation rate approach is based on the assumption that the budgeted cost rates are representative of the actual costs incurred. However, this assumption is often not true. The budgeted cost rates may be based on outdated information or on unrealistic assumptions. As a result, the unadjusted allocation rate approach can lead to inaccurate results.
The adjusted allocation rate approach is a more accurate approach that uses the actual cost rates to allocate overhead costs. This approach is based on the assumption that the actual cost rates are representative of the costs incurred. As a result, the adjusted allocation rate approach is more accurate than the unadjusted allocation rate approach.
The adjusted allocation rate approach is more complex than the unadjusted allocation rate approach, but it is more accurate. The adjusted allocation rate approach is more difficult to use, but it is more accurate.