When calculating the departmental overhead rate, the numerator should be?
A) The total estimated departmental overhead cost
B) The total amount of departmental allocation base
C) The total budgeted overhead cost
D) The actual quantity of the departmental allocation base used by the job

Question

Quizplus · Accepted Answer

The numerator should be the total estimated departmental overhead cost. This is because the departmental overhead rate is a predetermined rate used to allocate overhead costs to products or services based on the estimated level of activity in a department. Therefore, the numerator should reflect the estimated overhead cost for the department.

When Calculating the Departmental Overhead Rate, the Numerator Should Be