Answer (C) is correct.
Extended normal costing assigns both direct costs (such as labor and
materials) and overhead to cost objects by using budgeted rates. The
direct cost assigned equals the budgeted rate times the actual amount of
the direct-cost input. The overhead assigned equals the budgeted rate
times the actual amount of whichever driver or other base is used for cost
assignment purposes. The use of budgeted rates for overhead as well as
direct costs may be helpful to avoid fluctuations during the year. It is also
helpful when some direct costs, such as direct labor, may not be known
until year end.