Question

The proportion of an overhead activity consumed by a product is the

a. overhead ratio.
b. consumption ratio.
c. quick ratio.
d. fixed ratio.

Answer 1

The overhead ratio represents the percentage of total overhead costs allocated to a specific product based on its level of consumption.

Step-by-step explanation:

The correct answer is a. overhead ratio. The proportion of an overhead activity consumed by a product is called the overhead ratio. It represents the percentage of the total overhead costs allocated to a specific product based on its level of consumption.

For example, if a product consumes 20% of the total overhead costs, then its overhead ratio would be 20%. This ratio is used to determine the cost of producing a product and to make decisions related to pricing and profitability.