Most firms deal with overhead cost by waiting until the end of the accounting period to compute actual overhead rates.

Question

Quizplus · Accepted Answer

Most firms use estimated overhead rates throughout the accounting period to allocate overhead costs to products or services. These estimated rates are based on the expected level of activity or output for the period. At the end of the accounting period or year, the actual overhead costs are known and a true overhead rate can be calculated for that period.

Most Firms Deal with Overhead Cost by Waiting Until the End