Question

Which of the following formulas is used for calculating predetermined overhead? Question 18 options: Estimated Annual Overhead divided by Estimated Annual Activity Level Estimated Annual Activity Level divided by Estimated Annual Overhead Actual Direct Materials divided by Actual Direct Labor Unadjusted Cost of Goods Sol

Answer 1

Estimated Annual Overhead divided by Estimated Annual Activity Level

Step-by-step explanation:

The computation of the predetermined overhead rate. The formula is shown below:

Predetermined overhead rate = (Total estimated manufacturing overhead) ÷ (estimated direct labor-hours)

The estimated direct labor hour is a part of the activity level

And, it shows a relationship between the Total estimated manufacturing overhead and the estimated annual activity level

Hence, all other options are wrong