Which of the following is not a reason to use predetermined overhead rates?
A)to overcome the problems of assigning overhead to diverse types of products
B)to compensate for fluctuations in monthly overhead costs
C)to provide a means for assigning overhead during the period rather than at the end of the period
D)to smooth out the amount of overhead cost assigned to products when monthly production activity differs

Question

Quizplus · Accepted Answer

Using predetermined overhead rates is not primarily about overcoming the problems of assigning overhead to diverse types of products. Predetermined overhead rates are more about allocating overhead costs based on estimated activity levels rather than actual, to smooth out fluctuations in overhead costs, and to allow for the assignment of overhead costs to products during the production period.

Which of the Following Is Not a Reason to Use