For which costing system is overhead allocated on the basis of the actual direct labour hours worked?
A) Normal costing system
B) Process costing system
C) Activity-based costing system
D) None of these costing systems

Question

Quizplus · Accepted Answer

In a normal costing system, overhead is allocated on the basis of a predetermined overhead rate, which is calculated by dividing the estimated overhead costs for the period by the estimated direct labour hours for the period. The actual direct labour hours worked are then used to apply the predetermined overhead rate and allocate overhead costs to the products or services produced.

For Which Costing System Is Overhead Allocated on the Basis