Question

Which of the following mathematical expressions is used to calculate the budgeted variable overhead cost rate per output unit?

a) Budgeted variable overhead costs / Actual output units
b) Budgeted variable overhead costs / Budgeted output units
c) Actual variable overhead costs / Actual output units
d) Actual variable overhead costs / Budgeted output units

Answer 1

To calculate the budgeted variable overhead cost rate per output unit, divide the budgeted variable overhead costs by the budgeted output units. This helps businesses in planning and setting prices.

Step-by-step explanation:

The mathematical expression used to calculate the budgeted variable overhead cost rate per output unit is the budgeted variable overhead costs divided by the budgeted output units. This rate helps in planning the costs of production for a given period.

If a business budgets for $400 in variable costs to produce 80 haircuts, the budgeted variable overhead cost rate per haircut would be $400/80, resulting in $5 per haircut. This rate is used to estimate costs and set prices that will cover production expenses while potentially yielding profits.