In a job-order costing system that is based on machine-hours,which of the following formulas is correct?
A) Predetermined overhead rate = Actual manufacturing overhead ÷ Actual machine-hours
B) Predetermined overhead rate = Actual manufacturing overhead ÷ Estimated machine-hours
C) Predetermined overhead rate = Estimated manufacturing overhead ÷ Estimated machine-hours
D) Predetermined overhead rate = Estimated manufacturing overhead ÷ Actual machine-hours

Question

Quizplus · Accepted Answer

The predetermined overhead rate in a job-order costing system based on machine-hours is calculated by dividing the estimated manufacturing overhead by the estimated machine-hours. This allows businesses to allocate overhead costs to jobs more accurately throughout the year, even if actual overhead costs or machine-hours vary from the estimates.

In a Job-Order Costing System That Is Based on Machine-Hours,which