Thus the organization gets a clear idea of the expenses allocated and the expected profits during the year. The concept of predetermined overhead is based on the assumption that the overheads will remain constant, and the production value is dependent on it. If the business used the traditional costing/absorption costing https://www.bookstime.com/ system, the total overheads amounting to $26,000 will be absorbed using labor hours. Suppose the budgeted cost of overheads for the departmental store amounts to $20,000 per month, and […]