Which overhead rate is used for calculating the overhead in managerial accounting?

The correct answer is budgeted overhead because it represents the forecasted costs that a company anticipates incurring during a specific period. This rate is established before the period begins and is based on estimates which allow for planning and decision-making within the organization. It helps to create a framework for applying overhead to products or services as they are produced.

Budgeted overhead is essential in managerial accounting because it allows managers to allocate resources effectively and manage costs. By using budgeted overhead rates, managers can set standard costs, analyze performance, and compare actual costs to the budgeted amounts to make informed decisions about business operations.

In contrast, actual overhead is not typically used for initial calculations of product costs because it reflects past expenses and may not provide a reliable estimate for future production. Applied overhead refers to the overhead costs assigned to products based on the budgeted rate throughout the production process, making it a result of using the budgeted overhead. Variable overhead pertains only to costs that change with production levels and does not encompass all fixed and variable factors needed for a complete overhead analysis. Thus, the emphasis on budgeted overhead illustrates its significance in planning and controlling costs in managerial accounting.