All of the following are advantages of developing a predetermined overhead application rate except:
A) Short-run fluctuations in volume of output are normalized.
B) In a job order system, unit costs can be determined as soon as jobs are completed.
C) The overhead application rate facilitates assigning overhead costs to the ending inventory of work in process.
D) Actual overhead will always be less than applied overhead.

Question

Quizplus · Accepted Answer

Actual overhead may be greater or less than applied overhead, depending on the level of efficiency in the production process. Therefore, statement D is false and not an advantage of developing a predetermined overhead application rate.

All of the Following Are Advantages of Developing a Predetermined