Question

Pre-determined overhead rates are calculated by dividing estimates of total factory overhead cost in the upcoming accounting period (usually a year) by an estimated usage or capacity of some unit of related activity (such as direct labor hours).

A. True
B. False

Answer 1

The correct option is A, true

Step-by-step explanation:

The predetermined overhead absorption rate is a forecast overhead rate usually computed by estimated total factory overhead by the planned usage or capacity of the unit of the activity.

This is more like planning ahead for the overhead to be incurred, hence the correct option is A , which truly supported that the statement made in the question