When using the single-rate method,what should the fixed cost allocation be based?
A)Budgeted usage
B)Actual usage
C)Incremental cost allocation
D)Either A or B are correct.

Question

Quizplus · Accepted Answer

The single-rate method allocates fixed costs based on a predetermined rate, which is calculated by dividing budgeted (or actual) fixed costs by the budgeted (or actual) level of usage. Therefore, the fixed cost allocation can be based on either budgeted or actual usage, making either option (A) or (B) a valid choice. Therefore, (D) is the best choice. Incremental cost allocation, on the other hand, is a different method used to allocate costs based on changes in activity, and is not relevant to the single-rate method.

When Using the Single-Rate Method,what Should the Fixed Cost Allocation