How does the use of a predetermined overhead rate

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Reference no: EM131818904

Overhead can certainly cause issues when it comes to determining actual cost. Overhead is probably the most difficult of all the costs to determine an accurate actual cost.

Tracking is very limited and there can be issues in fairness when it comes to allocation between departments/processes. Some companies use a pre-determined overhead rate to try and get a more accurate cost.

How does the use of a predetermined overhead rate smooth product costs over a period of time?

Reference no: EM131818904

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