When estimated activity used for overhead application is less than the level of activity at capacity, the use of capacit

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When Estimated Activity Used For Overhead Application Is Less Than The Level Of Activity At Capacity The Use Of Capacit 1 (29.8 KiB) Viewed 40 times

When estimated activity used for overhead application is less than the level of activity at capacity, the use of capacity based overhead rate decreases net operating income due to the cost of idle capacity Job cost sheets contain entries for actual direct material, actual direct labot, and actual manufacturing overhead cost incurred in completing a job Using a plantwide overhead rate based on direct labor-hours will ensure that direct labor costs are correctly traced to jobs a Using multiple predetermined overhead rates rather than a single predetermined plant wide overhead rate improves the job cost accuracy If a job is not completed at the end of the period, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.