[amp_mcq option1=”actual manufacturing overhead rate” option2=”manufacturing overhead costs” option3=”overhead rate” option4=”direct rate” correct=”option1″]
The correct answer is: A. actual manufacturing overhead rate.
The actual manufacturing overhead rate is calculated by dividing the total indirect cost in a pool by the actual quantity of the cost allocation base. The cost allocation base is a measure of activity that is used to assign indirect costs to products or services. Common cost allocation bases include direct labor hours, machine hours, and units produced.
The actual manufacturing overhead rate is used to assign indirect costs to products or services in the period in which they are incurred. This information is used to prepare financial statements and to make decisions about pricing and product mix.
Option B, manufacturing overhead costs, is the total of all indirect costs incurred in a period. Option C, overhead rate, is a rate that is used to assign indirect costs to products or services. Option D, direct rate, is a rate that is used to assign direct costs to products or services.