Why Is Overhead Applied Using a Predetermined Overhead Rate

question 23

Multiple Choice

Why is overhead applied using a predetermined overhead rate?

• A)The actual amount of overhead is not determined until yearend and the company desires timely cost information.
• B)Actual manufacturing overhead costs are often larger than expected.
• C)It allows a company to overcost and undercost specific jobs as desired.
• D)It helps to reduce the overhead cost for the company.

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Definitions:

Unpleasant Circumstances

Situations or conditions that are difficult, uncomfortable, or distressing to experience or endure.

Inter-team Group Technique

A method aimed at enhancing cooperation and efficiency among different teams within an organization by improving communication and resolving conflicts.

Consensus

A group decision that has the expressed support of most members.

Authority Rule

A system or principle governing conduct or activity, where decisions are made based on hierarchical position or statutory power.