Predetermined overhead rates are necessary for which of the following reasons?
I. Actual overheads are not incurred evenly over the period.
II. Product costs need to be calculated promptly for decision- making.
III. Overhead cannot be traced directly to products because of its indirect nature.

Question

Quizplus · Accepted Answer

Predetermined overhead rates are used because actual overheads vary and are not incurred evenly, making it difficult to calculate product costs in real-time. Additionally, overheads are indirect costs that cannot be directly traced to products, necessitating an estimated rate for cost allocation and timely decision-making.

Predetermined Overhead Rates Are Necessary for Which of the Following