Which of the following is the correct formula to compute the predetermined overhead rate?
A)Estimated total units in the allocation base divided by estimated total manufacturing overhead costs.
B)Estimated total manufacturing overhead costs divided by estimated total units in the allocation base.
C)Actual total manufacturing overhead costs divided by estimated total units in the allocation base.
D)Estimated total manufacturing overhead costs divided by actual total units in the allocation base.

Question

Quizplus · Accepted Answer

The predetermined overhead rate is calculated by dividing the estimated total manufacturing overhead costs by the estimated total units in the allocation base. This formula allows for a consistent application of overhead costs to each unit of production during the period. The other options do not follow this formula and therefore are incorrect.

Which of the Following Is the Correct Formula to Compute