WK2 DQ2.docx - Predetermined overhead rate is an allocation rate that is used to apply the estimated cost of manufacturing overhead to cost objects foe

WK2 DQ2.docx - Predetermined overhead rate is an allocation...

This preview shows page 1 - 2 out of 4 pages.

Predetermined overhead rate is an allocation rate that is used to apply the estimated cost of manufacturing overhead to cost objects foe a specific reporting period. This rate is frequently used to assist in closing the book more quickly, since it avoids the compilation of actual manufacturing overhead costs as part of the period-end closing process [ CITATION Bra172 \l 1033 ]. However, the difference between the actual and estimated amounts of overhead must be reconciled at least at the end of each fiscal year. It is used to apply manufacturing overhead to products or job order and is usually computed at the beginning of each period by dividing the estimated manufacturing overhead cost by an allocation base (also known as activity base or activity driver). Commonly used allocation bases are direct labor hour, direct labor dollars, machine hour, and direct materials. Predetermined overhead rate is computed at the beginning of the period and is used to apply manufacturing overhead cost to jobs throughout the period. Predetermined overhead rate is calculated
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read all 4 pages?

  • Spring '18
  • professor newerze
  • overhead rate, estimated cost

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors