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Why do companies use a predetermined overhead rate rather than actual manufacturing overhead costs to apply overhead to jobs?

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January 5th, 2018

Why do companies use a predetermined overhead rate rather than actual manufacturing overhead costs to apply overhead to jobs?Explain underapplied and overapplied overhead and tell about the adjustment that is made at the end of the period.What is a plantwide overhead rate? Why are multiple overhead rates, rather than plantwide rates used by some companies?What happens to overhead rates based on direct labor when automated equipment replaces direct labor?

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