The Formula for Calculating the Predetermined Overhead Rate for a Cost

question 110

Multiple Choice

The formula for calculating the predetermined overhead rate for a cost pool is:

• A) Actual overhead for the cost pool ¸ Estimated units of the cost driver
• B) Estimated overhead for the cost pool ¸ Actual units of the cost driver
• C) Actual overhead for the cost pool ¸ Actual units of the cost driver
• D) Estimated overhead for the cost pool ¸ Estimated units of the cost driver

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Definitions:

Salaries Payable

A liability account that records the amounts of wages earned by employees that have not yet been paid to them.

Salaries Expense

An accounting item that represents the total amount paid to employees in the form of salaries over a specific period of time.

Adjusting Entry

A journal entry made in accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Prepaid Insurance

An asset account that represents insurance payments made in advance for future coverage periods.