If a company multiplies its predetermined overhead rate by the actual activity level of its allocation base,it is using

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Multiplying the predetermined overhead rate by the actual activity level of its allocation base is a characteristic of normal costing. In normal costing, an estimated or predetermined overhead rate is used to allocate overhead costs to products or services based on a chosen allocation base. This is in contrast to actual costing, where actual overhead costs are allocated based on actual usage of the allocation base. Standard costing and budget costing are specific types of normal costing that use predetermined rates based on expected or budgeted costs and activities. Ideal costing is not a commonly used costing method.

If a Company Multiplies Its Predetermined Overhead Rate by the Actual