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3 years ago

LO 4.4How is the predetermined overhead rate applied?

Business

1 answer:

soldier1979 [14.2K]3 years ago

4 0

Answer:

Please see explanation.

Explanation:

Once the factory overhead rate is determined using the estimated amount of factory overhead and estimated base, it is used to charge overhead cost to the jobs, products or work performed.

Since, not all overhead costs are known at the time of making the product, (such as electricity bill is received after the month end) therefore, the estimated rate is used to apply the overhead cost to the job or product using actual activity level. This is called absorption or application of overheads to the products / jobs.

Due to this, at each period end, the management calculates and compares the actual overhead cost with the applied overhead cost and determine the over or under applied overheads.

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algol13

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3 years ago

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Salsk061 [2.6K]

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3 years ago

A customer owns shares of restricted stock and now intends to sell them. if the proper forms are filed with the sec, the custome

lapo4ka [179]

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2 years ago

Which term can be defined as the net income that a firm reinvests in itself?

KengaRu [80]

Answer:

retention ratio

Explanation:

Retention ration is the portion of net income retained by a firm to grow its business rather than being declared and paid as dividened.

When a company makes profit at the end of financial period, the company can either retain part of its earning for business expansion, declare part as dividends paid to shareholder or combine both.

Where a firm now reinvest the portion of the profit earned in itself, it is called retention ratio.

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3 years ago