Question

The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:

Answer 1

Answer:

This is the Predetermined overhead rate

Explanation:

The predetermined overhead rate assigns a particular amount of manufacturing overhead to each direct labor or machine hour. This helps businesses allocate resources and also set pricing. This computation is usually done at the beginning of each period.

To calculate this, we divide the estimate of the manufacturing overhead cost total by the estimated number of machine hours. It is used to assign overhead cost to jobs.