Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

Which formula should be used to calculate an overhead absorption rate for a production process that is capital-intensive?

  • A$\frac{\text{labour hours}}{\text{overhead costs}}$
  • B$\frac{\text{machine hours}}{\text{overhead costs}}$
  • C$\frac{\text{overhead costs}}{\text{labour hours}}$
  • D$\frac{\text{overhead costs}}{\text{machine hours}}$

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