What are the three categories of manufacturing costs Why mus

What are the three categories of manufacturing costs? Why must a company use predetermined overhead rates when using job order costing?

Solution

Manufacturing Cost includes the sum of direct materials, direct labor and all indirect factory costs.

The three different types of costs are;

A predetermined overhead rate is used to apply overhead to jobs .it is calculated by dividing the total estimated overheads with the allocation base. A company uses predetermined overhead rates due to the following reasons;