Under which of the following circumstances would the base used to calculate the variable overhead rate be the same as that used for the fixed overhead rate?
A) When actual labor hours are the same as budgeted labor hours
B) When standard indirect labor hours agree with standard direct labor hours
C) In most circumstances; the base used for each calculation is normally the same.
D) When the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours

Question

Quizplus · Accepted Answer

The base used to calculate the variable overhead rate and fixed overhead rate will be the same if the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours. This is because the fixed overhead rate is typically calculated based on the normal capacity of the company's production facility, and the variable overhead rate is typically calculated based on the expected level of activity for the period. If the expected activity level for the period is the same as normal capacity, then the base used for both calculations will be the same.

Under Which of the Following Circumstances Would the Base Used