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Why do companies use a predetermined overhead rate rather than actual overhead costs to apply overhead to jobs?
Wiki User
∙ 13y ago
because they have no life, also they predetmined pigs
Wiki User
∙ 13y ago
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What is traditional approach income statement?
In traditional approach income statement, overheads are charged to product based on predetermined rate rather then based on actual activity.
In accounting is mileage a direct cost or an overhead?
Mileage is a overhead cost as mileage of cars or trucks which are not directly related with the manufacturing of units of products but required to transfer raw material from one place to another so it is overhead cost rather direct cost.
Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?
Because in ABC costing overheads are allocated based on activities performed by departments rather based on any rate or formula that's why as much activity any department perform as much cost will be allocated which is more accurate way of allocation.
What advantage does a normal costing system offer?
1.)Income smoothing purpose- Applied FOH rate is an average or normalised rate used in calculation of applied FOH cost.- Use only one surrogate as a FOH cost driver rather than FOH cost are being affected by many one-off and/ or uncontrollable factors2.) More timely factory overhead costs information (Esp. for pricing purpose)- Estimated (applied) FOHs can be made available before actual FOHs are available.3.) Removal of incentive for managers to produce for inventory. If the value of inventories includes FFO (Which is fixed cost), managers can bolster operating profit by producing more units than are sold.-->> Applied overhead cost = variable cost4.) Providing a basis for monitoring evaluating and controlling overhead costs by means of variance analysis.-->> Underapplied FOH = Applied FOH < Actual FOH -->> Unfavourable-->> Overapplied FOH = Applied FOH > Actual FOH -->> Favourable
Why would companies increase revenue rather than reduce expenses?
Increasing revenue is indicative of a growing company. ALL companies should try to reduce expenses... regardless of growth.
Why some company uses budgeted overhead costs rather than actual costs?
the reason was: control the budget,
What is traditional approach income statement?
In traditional approach income statement, overheads are charged to product based on predetermined rate rather then based on actual activity.
Activity based accounting?
Activity based accounting is a process in which factory overhead cost is allocated to different departments based on activity performed by those departments rather based on any predetermined rate.
Is depreciation manufacturing labor?
Depreciation is not a manufacturing labor rather it is manufacturing overhead as machines used in manufacturing is not part of labor rather it is part of overhead.
What is underground power transmission?
power cables under ground rather then overhead.
What is a DOHC motor?
It is an engine rather than motor - Double OverHead Cam
What is dogmatic absolutism?
Dogmatic Absolutism is believing the truth is acquired not through reasoning and inquiry but, rather, through some predetermined, nonintellectual faith.
In accounting is mileage a direct cost or an overhead?
Mileage is a overhead cost as mileage of cars or trucks which are not directly related with the manufacturing of units of products but required to transfer raw material from one place to another so it is overhead cost rather direct cost.
Am I more likely to find part time jobs in this economy than full time?
No. The migration has actually been from permanent hire to temp rather than full-time to part-time. It's more overhead for companies to hire lots of part-time workers.
Are boating charter services rather interesting for big companies?
Boat charter services are available to anyone who can afford them. In fact most of them would rather charter to an individual rather than rely on companies for business.
what are the top conference calling companies?
There are well know name conference calling companies like Logitech and AT&T. There are also free conference calling companies. Some companies offer plans on usage rather than a monthy bill.
Why is overhead allocation under ABC usually more accurate than either the plantwide overhead allocation method or the departmental overhead allocation method?
Because in ABC costing overheads are allocated based on activities performed by departments rather based on any rate or formula that's why as much activity any department perform as much cost will be allocated which is more accurate way of allocation.
