Metro Corporation uses a predetermined overhead rate of $20 per machine hour.In deriving this figure,the company's accountant used:
A)a denominator of budgeted machine hours for the current accounting period.
B)a denominator of actual machine hours for the current accounting period.
C)a denominator of actual machine hours for the previous accounting period.
D)a numerator of budgeted machine hours for the current accounting perioD.
E)a numerator of actual machine hours for the current accounting period.

Question

Quizplus · Accepted Answer

The accountant used a predetermined overhead rate, which means it was determined before the actual overhead costs were incurred. Therefore, the denominator should be based on budgeted machine hours for the current accounting period, not actual machine hours for either the current or previous period. The numerator is not relevant to the question.

Metro Corporation Uses a Predetermined Overhead Rate of $20 Per