Question 1
Which of the following is
not a common application base for calculating the predetermined overhead rate?
◦ Direct labor costs
◦ Administrative costs
◦ Machine hours
◦ Direct labor hours
Question 2
An application base should be an activity that
◦ is highly correlated with overhead.
◦ causes overhead to be incurred.
◦ both causes overhead to be incurred and is highly correlated with overhead.
◦ neither causes overhead to be incurred nor is highly correlated with overhead.