. In order to improve the accuracy of unit costs, most companies recompute the predetermined overhead rate each month. True or False

true

False.

In order to improve the accuracy of unit costs, most companies recompute the predetermined overhead rate each year, or even less frequently. The predetermined overhead rate is typically based on the annual estimated overhead costs and the estimated activity level, such as direct labor hours or machine hours.

Recomputing the predetermined overhead rate each month would be time-consuming and may not reflect the overall annual overhead costs accurately. It is more common to monitor and adjust the actual overhead costs on a periodic basis, such as monthly, and make necessary corrections to the costing system or allocation methods. However, the predetermined overhead rate itself is usually not recalculated on a monthly basis.