austindeel3662 austindeel3662
  • 11-09-2020
  • Business
contestada

Why do companies use predetermined overhead rates rather than actual manufacturing overhaed costs to apply overhead to job?

Respuesta :

Zviko
Zviko Zviko
  • 12-09-2020

Answer:

to avoid delaying the product costing exercise.

Explanation:

The actual overhead costs are usually not readily available when costing a product. Waiting for the actual costs would delay the product costing exercise, thus a company uses estimates (predetermined overhead rates) and later adjust for the over or under - application when actual information is available.

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