Question

Generally speaking, when going through the process of computing a predetermined overhead rate, the estimated total manufacturing overhead cost is determined before estimating the amount of the allocation base.
a. True
b. False

Answer 1

Answer: False

Explanation:

The amount of the allocation base is determined first and then based on this, the total manufacturing overhead is determined.

The allocation base includes those things that are used to support the production activities of the company during a period such as labor or machine hours and square foot occupied. When these are determined, the overhead costs needed to use these will then be determined.