Which of the following relationships is valid concerning fixed overhead budgeted at the beginning of the year?
A)BFOH = SFOR ´ AH
B)BFOH = SFOR ´ SH for actual production
C)BFOH = SFOR ´ SH for planned production
D)BFOH = SFOR/SH for actual production
E)none of these

Question

Quizplus · Accepted Answer

BFOH (Budgeted Fixed Overhead) is calculated by multiplying the predetermined overhead rate (SFOR) with the planned production hours (SH) at the beginning of the year. Therefore, option C is the valid relationship between BFOH, SFOR, and SH. Option A is incorrect as it does not account for the actual production hours. Option B is also incorrect as it uses actual production instead of planned production. Option D is incorrect as it divides SFOR by SH instead of multiplying them.

Which of the Following Relationships Is Valid Concerning Fixed Overhead