Asked by Katelyn Goodridge on Jul 27, 2024
Verified
The predetermined overhead rate is used to apply estimated overhead cost to jobs.
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead costs to products based on a predetermined formula.
Estimated Overhead Cost
Estimated overhead cost refers to the projected expenses related to manufacturing overhead or indirect costs that are expected to be incurred over a specified period.
- Gain an understanding of how predetermined overhead rates are calculated and applied.
Verified Answer
GS
Gurminder singhJul 31, 2024
Final Answer :
True
Explanation :
The predetermined overhead rate is calculated by dividing the estimated total overhead cost by the estimated total activity level. It is then used to apply overhead cost to individual jobs based on their actual activity level.
Learning Objectives
- Gain an understanding of how predetermined overhead rates are calculated and applied.
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