Which of the following is the correct method to calculate a predetermined overhead rate?
A) Budgeted total manufacturing cost/budgeted amount of cost driver.
B) Budgeted overhead cost / budgeted amount of cost driver.
C) Budgeted amount of cost driver / budgeted overhead cost.
D) Actual overhead cost /budgeted amount of cost driver.
E) Actual overhead cost / actual amount of cost driver.

Question

Quizplus · Accepted Answer

The correct method to calculate a predetermined overhead rate is by dividing the budgeted overhead cost by the budgeted amount of cost driver. This allows businesses to estimate the overhead cost per unit of the cost driver, facilitating more accurate costing and pricing strategies.

Which of the Following Is the Correct Method to Calculate