All of the following are true about using a predetermined overhead rate to apply overhead except,

Multiple Choice

• Estimates are used to calculate the rate.

• The rate is prepared at the beginning of the period.

• The rate is used to apply overhead at the end of the accounting period.

• Using this rate provides managers with up-to-date estimates of the costs of their processes during the period.

• A single allocation basis may fail to provide useful allocations for all production departments.