The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing...
The standard predetermined overhead rate used in setting the standard overhead cost is determined by dividing
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budgeted overhead costs by an expected standard activity index. |
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actual overhead costs by an expected standard activity index. |
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budgeted overhead costs by actual activity. |
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actual overhead costs by actual activity. |
Homework Answers
Ans. Option 1st
Predetermined overhead rate is equal to the ratio of expected overhead cost and expected level of activity. Actual activity is used to calculate the overhead applied and actual overhead cost is used to determine if overhead is over applied or under applied.
The formula is as follows:
Predetermined overhead rate = Budgeted overhead cost / Expected activity
Add Answer to:
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