Which of the following is the correct formula to compute the predetermined overhead rate?
A. Predetermined overhead rate = Actual total manufacturing overhead costs ÷ Estimated total units in the allocation base
B. Predetermined overhead rate = Estimated total units in the allocation base ÷ Estimated total manufacturing overhead costs
C. Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base
D. Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Actual total units in the allocation base.
Answer: C
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