Why is factory overhead 'applied' to products and jobs by manufacturing companies?

Question

Quizplus · Accepted Answer

Applying factory overhead to products and jobs allows managers to have a more timely determination of product costs during the manufacturing process. This helps them make more informed decisions regarding pricing, cost management, and budgeting. Actual overhead costs can be difficult to determine accurately, so applying a predetermined overhead rate based on estimated costs is a practical method for calculating and assigning these costs to jobs and products. While this method may not provide an exact cost of the job or product being processed, it allows for more efficient and effective cost management overall.

Why Is Factory Overhead 'Applied' to Products and Jobs by Manufacturing