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Which concept of capacity applies the least amount of overhead to units of production A. Theoretical B. Normal C. Practical D. Minimum volume

Accounting Cost Accounting Financial Accounting Bank Accounting managerial accounting
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Question added by Lesley Lanag CMA CPA , Senior Accountant , Takaful Emarat Insurance (P.S.C)
Date Posted: 2014/12/02
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by Deleted user

Answer A Is correct 

Lesley Lanag CMA CPA
by Lesley Lanag CMA CPA , Senior Accountant , Takaful Emarat Insurance (P.S.C)

In getting the standard cost or the predetermined rate, we divide the Budgeted cost over the Budgeted level of activity. In order to get the least amount of application rate, the denominator should be higher. Among the choices, the highest level of activity which will give us the least amount of application rate is Theoretical Capacity (answer A)

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