Why are actual overhead is rate seldom used in practice?

Actual overhead rates are seldom used in practice because they can fluctuate significantly over time, making budgeting and cost control difficult. Companies often prefer to use predetermined overhead rates based on estimated costs to provide more stability and predictability in pricing and financial planning. Additionally, using estimated rates allows for timely decision-making and smoother operations, as actual overhead costs may not be known until the end of a period. This approach helps to avoid the inconsistencies that can arise from the variability in actual overhead expenses.