Question

Which of the following approaches allocates overhead by multiplying an actual overhead rate à actual activity?

A) Actual costing.

B) Normal costing.

C) Regression costing.

D) Standard costing.

Answer 1

Solution is Option A: Actual Costing

In actual costing, as the name suggests, cost is measured using actual rates and actual quantity produced.

Normal costing is also similar to actual costing but in the case of manufacturing overheads, predetermined rates are used.

Regression costing is a quantitative technique where past data is used to determine cost.

Standard cost is a costing method in which we estimate the cost of production process and plan our activity accordingly.

Hence, Option A is correct.