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Rom4ik [11]
2 years ago
13

Compute predetermined overhead rates and explain why estimated overhead costs (rather than actual overhead costs) are used in th

e costing process.
Business
1 answer:
Crazy boy [7]2 years ago
6 0

Why estimated overhead costs (rather than actual overhead costs) are used in the costing process is explained below.

A predetermined cost is an expenditure that a company estimates ahead of time.

This cost is calculated prior to the purpose of production and includes all variable costs that affect production in a manufacturing business.

Actual overhead costs are difficult to calculate for each job, especially in a production environment with a large number of jobs.

As a result, overhead costs are allocated according to some standardized methods, which may link overhead costs to direct labor, machining time, and material used in each job.

Manufacturing overhead in a manufacturing organization refers to indirect costs that are required for production but cannot be traced back to individual products.

Machine depreciation and factory rental are two examples of manufacturing overhead costs.

Hence, computation of predetermined overhead rates is given above.

Learn more about overhead:

brainly.com/question/26082424

#SPJ4

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Assume that potential projects X, Y and Z will each pay a total of $100,000 over 20 years. X pays $8,000 per year for 10 years a
Marrrta [24]

Answer:

The answer is Project X is the most attractive to an investor.

Explanation:

We can use the definition of Net Present Value (NPV) to solve this problem and figure out which would be the best investment.

Net present value is the present value of future money. In other words, over certain period of time, how much is your investment worth today. It takes into consideration cash inflow and outflow over that period of time as well as interest that could be earned on alternative investments if you had the money today. See attachment to see the NPV formula.

In the attachment, we calculate the NPV for each one of the projects using a rate of return i=3% for all of them. Any rate of return could be used as long as they are the same for all projects.

A positive NPV value means a good investment and the higher that number is the better the investment. In this case, we can see that Project X has the higher NPV of all the projects. Therefore, project X is the most attractive for an investor.

6 0
3 years ago
Upon what specific assumptions is this production possibilities curve based?
mihalych1998 [28]

Answer:

C. Full employment, fixed supplies of resources, fixed technology, and two goods

Explanation:

Production Possibility curve: It is a curve that shows all possible combinations to the amounts of the two goods that can be produced with the available resources and technology.

In simple words, all resources which are used to produce the possible combinations are called full employment. Thus, these specific assumptions plays vital role in production possibilities curve.

So, A, B, and the D are incorrect options.

3 0
3 years ago
At the beginning of a year, a company predicts total direct materials costs of $900,000 and total overhead costs of $1,170,000.
ASHA 777 [7]

Answer:

1.30

Explanation:

The cost of production is usually split into direct and indirect cost or overheads. the overheads is usually stated as a function of the direct cost( labour, machine hours, materials etc.)

The predetermined overhead rate

= $1,170,000/$900,000

= 1.3

This means that the company will incur an overhead cost of $1.30 for every $1 spent on direct materials.

6 0
2 years ago
Sealed Bidding is appropriate when discussion/negotiations are required to determine price and delivery terms?
denpristay [2]

Answer:

B. False

Explanation:

In a sealed bidding, bidders have no opportunity to discuss/negotiate. They just present an offer adjusted to the terms of the requirer of the good or service that is submitted to bidding.

4 0
3 years ago
The payment made each period on an amortized loan is constant, and it consists of some interest and some principal. The closer w
qaws [65]

Answer:

The correct answer is False.

Explanation:

The amortization operation consists of regularly distributing the repayment of the principal (C0), together with the interest accrued throughout the life of the loan. The periodic payments made by the borrower are therefore intended to reimburse, extinguish or amortize the initial capital. This justifies the name of the depreciation transaction and the depreciation terms that are usually assigned to these payments.

8 0
3 years ago
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