Ask Experts Questions for FREE Help !
Ask
    jenanawi's Avatar
    jenanawi Posts: 13, Reputation: 1
    New Member
    		  
    #1

    Feb 7, 2009, 03:16 PM
    Predetermined overhead rate
    Hai all,
    I want to know, why firms use a predetermined overhead rate to alocate the overhead to a job or a product? Just for my knowledge only.
    Thanks
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
    		  
    #2

    Feb 8, 2009, 02:24 AM

    Because managers want to know the total cost of the job before the end of the accounting period. The use of such a rate enables an enterprise to determine the approximate total cost of each job when completed. If we don't use a predetermined OH rate we have to wait until the end of the period to know the actual cost of jobs. Moreover, POH rate is used to smooth seasonal variations in production
    Cynthia514's Avatar
    Cynthia514 Posts: 37, Reputation: 1
    Junior Member
    		  
    #3

    Feb 10, 2009, 12:37 PM
    Actually, this pre-determined rate is based on the experienced that the company has in the past.
    DanyelJones's Avatar
    DanyelJones Posts: 1, Reputation: 1
    New Member
    		  
    #4

    Jun 13, 2010, 07:44 AM

    What effect would change the predetermined overhead rate have on the company’s inventory values?
    hassanrkein's Avatar
    hassanrkein Posts: 1, Reputation: 1
    New Member
    		  
    #5

    Mar 27, 2011, 06:42 PM
    To enable managers, to record production during the period,
    To be able to monitor profitability and also to set prices,
    And to facilitate performance evaluation.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Predetermined overhead rate [ 3 Answers ]

Showers Company estimates the following overhead costs for the coming year: Equipment depreciation $150,000 Equipment maintenance 50,000 Supervisory salaries 20,000 Factory rent 200,000 Total $420,000 Showers is also budgeting $600,000 in direct labor costs and 14,000 machine hours for the...

Predetermined Overhead Rate & Overhead Applied [ 1 Answers ]

B3 Company is a manufacturing firm that uses job-order costing. The company applies overhead to jobs using a predetermined overhead rate based on machine-hours. At the beginning of the year, the company estimated that it would work 24,000 machine-hours and incur $216,000 in manufacturing overhead...

Predetermined overhead rate [ 2 Answers ]

I have a question on predetermine overhead rate and I think I am doing it right but I want a second opinion. XXX company estimates: manufacturing overhead cost to be $800,000 and direct materials to be used in production, $500,000. Beginning Ending Raw...

Predetermined overhead rate.etc. [ 0 Answers ]

ABC has made the following predictions for amounts of manufacturing overhead costs during 2007: Cost Amount Factory rent $150,000 Factory utilities $90,000 + $2 per machine hour Supervisory costs $120,000 + $5 per machine hour Indirect materials $3 per direct labor hour...

View more questions Search