The predetermined overhead rate is calculated as:
A)Estimated Overhead Costs * Estimated Cost Driver Activity.
B)Estimated Overhead Costs / Estimated Cost Driver Activity.
C)Estimated Overhead Costs - Estimated Cost Driver Activity.
D)Estimated Overhead Costs + Estimated Cost Driver Activity.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing estimated overhead costs by the estimated cost driver activity. This helps in assigning overhead costs to products or services based on their usage of the cost driver. Option A has a multiplication sign instead of a division sign, making it incorrect. Option C has a subtraction sign instead of a division sign, making it incorrect as well. Option D is incorrect as it adds two different types of costs together. Therefore, option B is the best choice.

The Predetermined Overhead Rate Is Calculated As