The purpose of an overhead application rate is to:
A) Assign a portion of indirect manufacturing costs to each product manufactured.
B) Determine the type and amount of costs to be debited to the Manufacturing Overhead.
C) Charge the Work-in-Process Inventory amount with the appropriate amount of direct of manufacturing costs.
D) Allocate manufacturing overhead to expense in proportion to the number of units manufactured during the period.

Question

Quizplus · Accepted Answer

The purpose of an overhead application rate is to assign a portion of indirect manufacturing costs (also known as overhead costs) to each product manufactured. This is done by using a predetermined overhead rate to allocate these costs to the products based on a chosen allocation base, such as direct labor hours or machine hours.

The Purpose of an Overhead Application Rate Is To