Which of the following formula is used by Duration-Based Costing (DBC) to assign the overhead costs to a particular product?
A)Overhead cost per unit = Units of product produced at practical capacity ÷ Activity rate
B)Overhead cost per unit = Total overhead cost ÷ Activity rate
C)Overhead cost per unit = Overhead rate × Capacity cost rate for a particular product
D)Overhead cost per unit = Overhead rate × Cycle time for a particular product

Question

Quizplus · Accepted Answer

Duration-Based Costing (DBC) assigns overhead costs based on the cycle time for a particular product, which is represented by the formula in option D: Overhead cost per unit = Overhead rate × Cycle time for a particular product. This method focuses on the time it takes to produce a product as the basis for allocating overhead costs.

Which of the Following Formula Is Used by Duration-Based Costing