The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:
A) Predetermined overhead rate.
B) Overhead variance rate.
C) Miscellaneous overhead rate.
D) Chargeable overhead rate.
E) Estimated labor cost rate.

Question

Quizplus · Accepted Answer

The description given matches the definition of predetermined overhead rate, which is established before the actual costs are known and is based on estimated overhead costs and an allocation factor such as direct labor hours or machine hours.

The Rate Established Prior to the Beginning of a Period