USA Managerial Accounting: In determining Denominator Level Capacity, why

[Aardvark]

In determining the overhead fixed rate in managerial accounting, why is the allocation rate located in the denominator and not the numerator. What makes the denominator significant in the equation for this purpose?

 

[kirby]

For the same reason that you say you are traveling at 60 miles per hour and not 1/60th of an hour per mile. A ratio is typically expressed in its most useful form.

 

[Aardvark]

Thank you Kirby! Now, how is the emphasis of the denominator make that ratio its most useful form? Thanx!

 

[BIG E]

The denominator is the basis for calculating ratios. That's what the ratios are based on.
That part of the numerator that is part of the denominator.

 

[Aardvark]

Thank you Big E. Your answer helps.

 

[2022wenonah]

Why is the allocation rate located in the denominator and not the numerator?

 

[BIG E]

Why is the sky blue?