What is the formula for the overhead recovery rate using an activity-based costing system?
A)overhead cost divided into relevant cost driver.
B)overhead cost divided by the number of products.
C)overhead cost divided into labour hours.
D)overhead cost divided by relevant cost driver.

Question

Quizplus · Accepted Answer

The formula for the overhead recovery rate using an activity-based costing system is overhead cost divided by relevant cost driver. This is because activity-based costing systems identify multiple cost drivers and allocate overhead costs based on the level of activity consumed by each cost driver. Dividing overhead costs by the relevant cost driver provides a more accurate allocation of overhead costs to products or services.

What Is the Formula for the Overhead Recovery Rate Using