Why Is It Necessary to Estimate the Annual Overhead Costs

Multiple Choice

Why is it necessary to estimate the annual overhead costs and annual operating activity when calculating the predetermined overhead rate?

A) Cost benefit analysis indicates that it is too expensive to gather actual costs.
B) The predetermined overhead rate is only used for internal reporting, and does not need to equal the higher standards required for external reporting.
C) In order to obtain timely information, companies cannot wait for actual costs to be determined.
D) All of the above.