ECONOMICS

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COST ACCOUNTING

JOB ORDER COSTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
The standards set at the beginning of the period that use estimates of overhead costs and allocation factors such as direct labor estimates, and which are used to assign overhead costs to jobs, are:
A
Estimated labor cost rate
B
Predetermined Labor cost rate
C
Overhead Variance rate
D
Predetermined Overhead rate
Explanation: 

Detailed explanation-1: -The predetermined standard overhead rate indicates the estimated consumption of overhead costs in a particular period. It is computed by dividing the estimated total overhead costs by the estimated activity rate.

Detailed explanation-2: -the process used to assign overhead costs to products is called overhead. allocation.

Detailed explanation-3: -The distribution of overheads to several department or cost center proportionately on some equitable basis is known as apportionment of overheads.

Detailed explanation-4: -A predetermined overhead rate is calculated at the start of the accounting period by dividing the estimated manufacturing overhead by the estimated activity base. The predetermined overhead rate is then applied to production to facilitate determining a standard cost for a product.

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