Which of the following is the correct formula to calculate the predetermined factory overhead rate?

Question

Quizplus · Accepted Answer

The predetermined factory overhead rate is calculated by dividing the estimated total factory overhead costs by the estimated activity base. This rate is then used to allocate overhead costs to individual products or jobs during the accounting period. Option B and D are incorrect because they use actual costs instead of estimated costs, which is not appropriate for calculating a predetermined rate. Option C is incorrect because it divides estimated costs by actual activity, which could result in inaccurate overhead allocations.

Which of the Following Is the Correct Formula to Calculate