What is the purpose for using predetermined overhead rates?
A) Delays in product costing can be avoided
B) Variation in cost assignment due to seasonality can be prevented
C) Variation in cost assignment due to short-term variations in volume can be prevented
D) Use of predetermined overhead rates serves all the above purposes

Question

Quizplus · Accepted Answer

As stated in the text, predetermined overhead rates serve to (a) enable accountants to determine costs earlier than if using actual costs, (b) prevent variations in costs due to the uneven occurrence of cost throughout the year, and (c) prevent short-term variations in unit cost due to volume variations.

What Is the Purpose for Using Predetermined Overhead Rates