Question

What is the purpose of using predetermined overhead rates: Variation in cost assignment due to short-term variations in volume can be prevented Delays in product costing can be avoided Variation in cost assignment due to seasonality can be prevented. All of the answers are correct.

Answer 1

Answer:

All of the answers are correct.

Explanation:

At the beginning of the accounting period a pre-determined overhead is computed by dividing the estimated overhead production by the estimated basis of operations. The default overhead rate is then applied to manufacturing, so that the standard cost for a product may be calculated

The purpose of using pretermined overhead rates are

Delays in product costing can be avoided

Variation in cost assignment due to seasonality can be prevented

Variation in cost assignment due to short-term variations in volume can be prevented

The Use of predetermined overhead rates serves all the above purposes

Hence, all answers are correct.