The Overhead Cost Applied to a Job Is Equal to the Budgeted

question 99

True/False

The overhead cost applied to a job is equal to the budgeted overhead rate times the budgeted amount of the cost driver.

---

Definitions:

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead to individual units of production based on estimated costs.

Machine Hours

The total hours that a machine or group of machines operates during a specific period, often used as a basis for allocating manufacturing overhead.

Direct Labour

Compensation for employees who engage specifically in the creation of a company's products, an essential component of production costs.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, based on a predetermined formula.