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Nash Glassworks Company has budgeted fixed factory overhead of $100,000 per month. The company uses absorption costing for both external and internal financial reporting purposes. Budgeted factory overhead rates for cost allocations for the month of April using alternative unit output denominator levels are shown below.
Actual output for the month of April was 800,000 units of glassware. When Nash Glassworks Company allocates fixed costs, management will select a capacity level to use as the denominator volume. All of the following would be appropriate as the capacity level that approximates actual volume levels exceptA. Normal capacity. B. Expected annual activity. C. Theoretical capacity. D. Master-budget capacity. |