Asked by
Aayush Keshri
on Nov 19, 2024Verified
If the predetermined overhead rate is based on the estimated level of activity for the current period, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use.
Predetermined Overhead Rate
An established cost allocation rate that assigns expected indirect costs to products or services based on a chosen activity base.
Level of Activity
The volume or scale of operation in a business, often influencing costs and efficiency, such as the number of units produced or sold.
- Familiarize with the calculation and implementation of predetermined overhead rates in the context of job costing.
Verified Answer
LG
Learning Objectives
- Familiarize with the calculation and implementation of predetermined overhead rates in the context of job costing.
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