Answer the following questions briefly:

1. Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to apply overhead costs to jobs?
2. Provide two reasons why overhead might be under applied in a given year?
3. Why is it more accurate to clear out the balance of any under- or overapplied manufacturing overhead costs to WIP, finished goods and cost of goods sold than to cost of goods sold only?
4. Under what circumstances is it more appropriate to use direct labour hours rather than machine hours to allocate manufacturing overhead costs?