Question

In calculating a predetermined overhead rate, a recent trend in automated manufacturing operations is to choose an activity base related to

Answer 1

Answer: c. machine hours.

Explanation:

In reference to Automated Operations, the Activity base that is usually used to in determining a pre-determined overhead rate are Machine hours.

It is standard practice to relate overhead to the Direct Labor involved in the production of a commodity and since in this case the direct Labor mostly consists of Machines (Automated) then it is best to relate activities to the Machine hours involved instead.