When the predetermined overhead rate is based on direct labour-hours,the amount of overhead applied to a job is proportional to the amount of actual direct labour-hours incurred on the job.

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This statement is true. When the predetermined overhead rate is based on direct labour-hours, the amount of overhead applied to a job is calculated by multiplying the predetermined overhead rate by the actual direct labour hours used on the job. Therefore, the overhead applied to a job is proportional to the amount of actual direct labour-hours incurred on the job.

When the Predetermined Overhead Rate Is Based on Direct Labour-Hours,the