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

This relationship states that the fixed overhead budgeted at the beginning of the year (BFOH) is equal to the standard fixed overhead rate (SFOR) multiplied by the budgeted direct labor hours (F1F1F1S1) and the budgeted variable overhead rate (F1F1F10). This is valid as direct labor hours and variable overhead rates are factors that contribute to fixed overhead expenses. Option A is incorrect as it includes actual direct labor hours instead of budgeted direct labor hours. Option B is incorrect as it includes actual production instead of planned production. Option D is incorrect as it only includes the standard fixed overhead rate and actual production hours, without considering the budgeted variable overhead rate.

Which of the Following Relationships Is Valid Concerning Fixed Overhead