Question

An overhead rate for each department is computed by:

a.allocated service costs to the overhead costs that are directly traceable to the producing department and dividing this total by the measure of activity for that department.
b.dividing the product of the measure of activity for a producing department and the allocated service costs that are directly traceable to the producing department by the directly traceable overhead costs.
c.dividing the allocated service costs of a producing department by the overhead costs that are directly traceable to the producing department and multiplying the result by the measure of activity for that department.
d.dividing the difference of actual overhead costs of a production department and the allocated service costs to that department by the measure of activity for that department.

Answer 1

The calculation for an overhead rate is allocating service costs to the overhead costs and dividing by the measure of activity. Spreading the overhead refers to allocating or distributing the overhead costs to different departments or cost centers based on their respective usage or activity.

Step-by-step explanation:

The calculation for an overhead rate for each department is option a: allocating service costs to the overhead costs that are directly traceable to the producing department and dividing this total by the measure of activity for that department. This calculation helps determine how much of the overhead costs can be attributed to each department based on the activity level.

Spreading the overhead refers to allocating or distributing the overhead costs to the different departments or cost centers based on their respective usage or activity. This allows for a more accurate distribution of costs and helps each department understand their contribution to the overall overhead.