Question

Which of the following is the correct formula to compute the predetermined overhead rate

A) Estimated overhead costs / Actual machine hours
B) Actual overhead costs / Estimated machine hours
C) Estimated machine hours / Actual overhead costs
D) Actual machine hours / Estimated overhead costs

Answer 1

The correct formula to compute the predetermined overhead rate is estimated overhead costs divided by actual machine hours.

Step-by-step explanation:

The correct formula to compute the predetermined overhead rate is:

A) Estimated overhead costs / Actual machine hours

Using this formula, you divide the estimated overhead costs by the actual machine hours. This calculation gives you the predetermined overhead rate, which is the estimated amount of overhead cost allocated to each hour of machine usage.