The activity level of the denominator is defined by one of several alternatives, Also known as denominator volume and employed in determining the standard fixed OH application rate
The predetermined production volume level is used to calculate a budgeted fixed-factory-overhead rate that accounts for inventory costs. Also known as denominator activity or level.
The production volume ratio compares actual production output for a period in standard direct labor hours to budgeted hours for a production cost center. It is calculated as follows: (Standard direct labor hours of actual production minus budgeted direct labor hours) 100%.
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