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The Formula for Computing the Predetermined Overhead Rate Is

question 83

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The formula for computing the predetermined overhead rate is:
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base


Definitions:

Economic Value

The assessment of value that a good or service offers to an economic entity.

Operating Cost

Expenses associated with the day-to-day operations of a business, including costs for materials, labor, and overhead.

Useful Life

The estimated period over which a fixed asset is expected to be usable for the purpose it was acquired.

Economic Value

Economic value refers to the worth of a good or service determined by its utility and ability to meet the demand of those willing to pay for it.

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