Why Is It Necessary to Estimate the Annual Overhead Costs

question 43

Multiple Choice

Why is it necessary to estimate the annual overhead costs and annual operating activity when calculating the predetermined overhead rate?

• A)Cost benefit analysis indicates that it is too expensive to gather actual costs.
• B)The predetermined overhead rate is only used for internal reporting, and does not need to equal the higher standards required for external reporting.
• C)In order to obtain timely information, companies cannot wait for actual costs to be determined.
• D)all of the above

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Definitions:

Variable Rate

An interest or finance charge rate that can change over the period of the loan or credit agreement, often tied to an index or benchmark.

Coil Springs

Mechanical devices that can compress or extend to absorb impact or maintain force between contacting surfaces.

Hub Carriers

Component of a vehicle's suspension system that holds the wheel bearing and is mounted on the suspension.

Damper

A device used to dampen or inhibit the oscillation of mechanical energy, often seen in vehicle suspension systems.