Question: Please answer these questions: 1) Why do companies use a rate to allocate overhead rather than simply allocating actual overhead costs incurred during the month?

Please answer these questions:

1) Why do companies use a rate to allocate overhead rather than simply allocating actual overhead costs incurred during the month?

2) What figure is used in the denominator of the formula to compute the application rate?

3) How is this figure determined?

4) What happens to the difference (if any) between the debit (actual) side of the overhead account and the credit (applied) side of the account?

5) What exactly IS overhead?

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