A predetermined manufacturing overhead rate can be based on

A predetermined manufacturing overhead rate can be based on each of the following except direct labor hours. number of units. machine hours. direct labor costs

Solution

The Answer is “Number of Units”

- A predetermined manufacturing overhead rate can be computed based on either direct labor hours or machine hours or direct labor costs.

- A predetermined manufacturing overhead rate is the amount of indirect manufacturing cost to be charged to each unit of production.

- Predetermined Manufacturing overhead rate is a budgeted manufacturing cost per unit of activity

- The Number of Units shall not be considered in activity base for calculating the Predetermined Manufacturing Overhead rate

- Predetermined Manufacturing Overhead rate = Estimated Total Manufacturing Overhead costs / Estimated Total Amount or number of hours in the allocation base