Under which of the following circumstances would the base used to calculate the

Question

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? Question 1 options: When actual labor hours are the same as budgeted labor hours When standard indirect labor hours agree with standard direct labor hours In most circumstances; the base used for each calculation is normally the same. When the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours

Explanation / Answer

A company uses direct labor hours to allocate variable and fixed overhead costs. 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 the number of labor hours expected to be incurred for the period is the same as normal capacity direct labor hours

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