Overhead costs are assigned to work in process using a predetermined rate.

Question

Quizplus · Accepted Answer

Predetermined overhead rate (POHR) is calculated at the beginning of the period by estimating the total manufacturing overhead cost and dividing it by an allocation base, such as direct labor hours or machine hours. This rate is then used to assign overhead costs to work in process based on the actual usage of the allocation base. Therefore, overhead costs are assigned to work in process using a predetermined rate.

Overhead Costs Are Assigned to Work in Process Using a Predetermined