Which of the following is the correct formula to compute the predetermined overhead rate? Multiple ChoicePredetermined overhead rate = Estimated total units in the allocation base : Estimated total manufacturing overhead costs Predetermined overhead rate = Estimated total manufacturing overhead costs : Estimated total units in the allocation base CorrectPredetermined overhead rate = Actual total manufacturing overhead costs : Estimated total units in the allocation base IncorrectPredetermined overhead rate = Estimated total manufacturing overhead costs : Actual total units in the allocation base.

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Business

Deven Cuevas

27 October, 23:35

Which of the following is the correct formula to compute the predetermined overhead rate? Multiple ChoicePredetermined overhead rate = Estimated total units in the allocation base : Estimated total manufacturing overhead costs Predetermined overhead rate = Estimated total manufacturing overhead costs : Estimated total units in the allocation base CorrectPredetermined overhead rate = Actual total manufacturing overhead costs : Estimated total units in the allocation base IncorrectPredetermined overhead rate = Estimated total manufacturing overhead costs : Actual total units in the allocation base.

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German Francis · Answer 1

Answer: The correct formula to compute the predetermined overhead rate is Predetermined overhead rate = Estimated total manufacturing overhead costs : Estimated total units in the allocation base.

Explanation:

For example:

Estimated total manufacturing overhead costs = 5000000

Estimated total units in the allocation base = 60000

Total real units produced = 30000

So, Predetermined overhead rate = 5000000 : 60000 = 83.33

Real overhead cost = Predetermined overhead rate * Total real units produced.

So Real overhead cost = 83.33 * 30000 = 2499900.