Why do companies use predetermined rather than actual manufacturing overhead rates?

Q: nder what conditions might a company use activity-based costing to allocate factory overhead to…

A: Activity-based costing (ABC costing) is a way of assigning manufacturing overhead costs to…

Q: Which is not a step in analyzing the cost driver for manufacturing overhead?A. identify the costB.…

A: All indirect expenses involved during in the manufacturing process are referred to as manufacturing…

Q: how do I find total over- or underapplied fixed manufacturing overhead?

A: Overhead: Overhead refers to the costs, which are utilized in business activities, however cannot be…

Q: What was the company’s plantwide predetermined overhead rate?

A: Meaning of overhead rate: The overhead rate is the total of indirect cost for a specific reporting…

Q: Why is industrial overhead calculated using direct labor

A: This question explains about  industrial overhead that which is  using direct labor:

Q: Determining the basis for applying manufacturing overhead costs involves A. primarily the…

A: Manufacturing Overhead is the indirect cost incurred on Manufacturing activity in a factory . It is…

Q: What is a predetermined overhead rate and explain why many companies use it?

A: The outlays that are not directly related to the production are known as overheads. These can be of…

Q: Which one of the following is not correct regarding the predetermined overhead rate? O a. The…

A: The predetermined overhead rate is used to allocate manufacturing overhead costs during current…

Q: Why is direct labor a poor base for allocating overhead in many companies?

A:

Q: Why do businesses apply overhead to tasks using fixed rates rather than real manufacturing overhead…

A: This question deals with real manufacturing overhead costs:

Q: Explain the benefits of using a predetermined overhead rate instead of an actual overhead rate.

A:

Q: Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to…

A: If actual manufacturing overheads are applied then  costs are unknown. if calculated need to wait…

Q: What happens to overhead rates based on direct labor when automated equipment replaces direct labor?

A: Predetermined Overhead Rate: Predetermined overhead rate is a measure used to allocate the estimated…

Q: Overhead costs are underapplied if the amount applied to Work in Process is:

A: Overheads: Overheads refer to the business expenses incurred by the company which might be directly…

Q: What are the differences between Underapplied Factory Overhead and Overapplied Factory Overhead?

A: Overhead: Overhead cost means expenses referred to indirect cost. The overhead cost like rent,…

Q: Discuss why businesses apply overhead to projects using predefined (factory) rates rather than real…

A: This question deals with predefined (factory) rates and real manufacturing overhead expenses.

Q: What are the arguments in favor of treating fixed manufacturing overhead costs as period costs?

A: Period costs: Period costs are the costs other than the product costs. These costs are not incurred…

Q: Why would a manufacturing firm switch from direct labor hours to machine hours as the cost driverfor…

A: Direct labor:   Direct labor includes the wages of the employees who are directly involved in…

Q: What are the arguments in favor of treating fixed manufacturing overhead costs as product costs?

A: Following are the arguments in treating fixed manufacturing overhead costs as product costs: For…

Q: What are the shortcomings of waiting untilthe actual factory overhead expenses areknown before…

A: Factory Overheads mean indirect costs.

Q: Explain how the analysis of fixed manufacturing overhead costs differs for (a) planning and control…

A: Fixed Cost:The cost which does not fluctuate on the basis of the output level produced. It remains…

Q: Please explain:: What is the purpose of an overhead rate What are the steps to apply the overhead…

A: Requirement 1:   The overhead rate is used to allocate the indirect cost to the direct costs being…

Q: Which one of the following represents a period cost? a. Fringe benefits associated with factory…

A: Financial statements are statements which states the business activities performed by the company .…

Q: Why might a company choose a process costing system over a job order costing system? How are the two…

A: Cost accounting is beneficial since it can demonstrate where a corporation spends money, earns…

Q: When and how to calculate the predetermined overhead rate?

A: The manufacturing overhead are applied to production on the basis of estimated activity rates.

Q: Why are some manufacturing firms switching from direct-labor hours to machine hours or throughput…

A: Direct labor: Direct labor includes the wages of the employees who are directly involved in…

Q: Why aren’t actual manufacturing overhead costs traced to jobs just as direct materials and…

A: Manufacturing costs can be divided into two categories based on its allocation; direct costs,…

Q: Explain why a manufacturer’s cost of supervising production might be a step-fixed cost.

A: Step-fixed costs: Step-fixed costs remain fixed over a wide range of activity but it jumps to a…

Q: Discuss the reason why companies use predetermined (factory) overhead rates rather than actual…

A: Manufacturing overheads are the manufacturing costs that could not be directly associated with each…

Q: What is the effect on the cost of goods sold and net operating income, if the cost of factory…

A: If cost of factory overhead applied are greater than the cost actual factory overhead, cost of goods…

Q: How would the process-costing computations differ from those illustrated in the chapter if overhead…

A: Process Costing: It is a method of cost accounting used by an enterprise with processes categorised…

Q: In what way does the accounting treatment of factory overhead differ from that of direct materials…

A: Factory overhead is defined as cost incurred during the process of manufacturing but not including…

Q: What information is contained in a production report? What are equivalent units and how would a…

A: Financial report: Financial reports can be defined as the summary of statements that contains the…

Q: When activity-based costing is used, why do manufacturing overhead costs often shift from…

A:

Q: Why is the cost of idle time treated as manufacturing overhead?

A:

Q: How do I calculate manufacturing overhead based on direct labor hours

A: Manufacturing overhead means all type of indirect costs that are incurred for production and…

Q: Determining the basis for applying manufacturing overhead costs involves OA. primarily the…

A: Manufacturing overhead costs means all indirect costs incurred in production or selling of goods. It…

Q: What account is credited when overhead cost is applied to Work in Process? Would you expect the…

A:

Q: Which one of the following would not be classified as manufacturing overhead? a Indirect labor b…

A: Cost Accounting: It is the process of collecting, recording, analyzing the cost, summarizing cost,…

Q: Which method of determining operating income is used internally for decision making and considers…

A: There are mainly two costing methods adopted by the management to determine the operating income,…

Q: Under what conditions might a company use activity-based costing to allocate factory overhead to…

A:

Q: What is the overhead cost per product, under traditional costing? Predetermined Overhead Rate =…

A: Tri-Bikes Traditional Costing: Predetermined overhead = Estimated total overhead / Estimated total…

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.