The formula for the overhead recovery rate using an activity-based costing system is:

Question

Quizplus · Accepted Answer

An activity-based costing system uses relevant cost drivers to allocate overhead costs to products or services. Therefore, the overhead recovery rate should be calculated by dividing the overhead cost by the relevant cost driver. Option A is similar to this, but D is more specific in mentioning "relevant cost driver". Options B and C are not relevant as they do not consider the different activities that cause overhead costs.

The Formula for the Overhead Recovery Rate Using an Activity-Based