When actual overhead costs are not known until the end of the month, an estimated overhead application rate should be determined so that the total weekly costs can be applied.

Question

Quizplus · Accepted Answer

Using an estimated overhead application rate allows a company to allocate overhead costs to products or projects on a consistent basis throughout the month, even when actual overhead costs are not yet known, facilitating more timely and accurate cost tracking and decision-making.

When Actual Overhead Costs Are Not Known Until the End