Question

The predetermined overhead allocation rate is an estimated overhead cost per unit of the allocation base and is calculated at the beginning of the accounting period. True or False

Answer 1

TRUE

Step-by-step explanation:

`(Cost\: Of \:Manufacturing \:Overhead)/(Cost \:Driver)= Overhead \:Rate`

The expected overhead cost for the period are allocated over a cost driver ussually; labor hours, machine hours or labor cost.

This is done when the company generated their budget for the upcomming period thus, at the beginning of the accounting period.

Then, at year-end or end-of-the-month the company will adjust the overhead against the actual overhead cost.