An operating budget is used to

• A. Calculate overhead Rates
• B. Allocate overhead resources
• C. Set tax rates
• D. Approve spending levels

Answer: (B)

An operating budget is a plan for the day-to-day operations that shows how resources will be used in the coming period. It translates strategic goals into actual spending and activities. In this plan, you allocate resources across departments and activities, including assigning overhead costs to the areas that will incur them. This allocation helps managers control spending and understand how overhead supports operations, ensuring resources are directed where they’re needed most.

Calculating overhead rates is a costing activity used to price products or services, not the budgeting process itself. Tax rates are determined by law and are not set by the budget. Approving spending levels is a governance step that often happens through separate approval processes; the budget provides the framework for those decisions.