What Formula Is Used to Calculate the Predetermined Overhead Rate

question 170

Multiple Choice

What formula is used to calculate the predetermined overhead rate?

• A)estimated annual overhead / estimated annual activity level
• B)actual annual overhead / estimated annual activity level
• C)estimated annual overhead / actual annual activity level
• D)actual annual overhead / actual annual activity level

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Definitions:

Current Assets

Items that are likely to be cashed in, sold off, or used up within one year or during the usual operating period of a company.

Indirect Method

An approach used in cash flow statements to adjust net income for non-cash transactions and changes in working capital to calculate operating cash flow.

Operating Activities

Activities that constitute the primary or main activities of a business, including the production, sale, and delivery of its products and services.

Direct Method

A way of preparing the cash flow statement in which actual cash receipts and payments are reported, rather than adjusting net income for changes in non-cash accounts.