Why do many managers desire to use a predetermined overhead rate instead of an actual overhead rate?
A) Because it is impossible to ever know actual overhead costs.
B) Because predetermined overhead rates are more accurate than actual overhead rates.
C) Because actual overhead amounts are often not known in a timely enough manner to make decisions.
D) Because the use of predetermined overhead rates will always result in lower product prices.

Question

Quizplus · Accepted Answer

Many managers prefer to use a predetermined overhead rate because actual overhead amounts are often not known in a timely manner to make decisions. Using actual overhead rates may require waiting until the end of the period or year to obtain the necessary information, which may delay decision-making processes. With a predetermined overhead rate, managers can estimate overhead costs at the beginning of the period and use that information to make timely decisions.

Why Do Many Managers Desire to Use a Predetermined Overhead