The predetermined overhead rate is based on the relationship between estimated annual overhead costs and estimated annual operating activity expressed in terms of a common activity base.

Question

Quizplus · Accepted Answer

This statement is true. The predetermined overhead rate is calculated by dividing estimated annual overhead costs by the estimated amount of the common activity base. This rate is then used to allocate overhead costs to jobs or products based on their usage of the activity base.

The Predetermined Overhead Rate Is Based on the Relationship Between