If the predetermined overhead rate on is based on the level of activity at capacity, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use.

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If the predetermined overhead rate is based on the level of activity at capacity, then products will only be charged for the capacity they use, which is the actual amount of overhead incurred during production. They will not be charged for the capacity they do not use, which is the difference between the actual overhead incurred and the budgeted overhead based on capacity.

If the Predetermined Overhead Rate on Is Based on the Level