Overhead Rate Meaning, Formula, Calculations, Uses, Examples
The third step is to compute the predetermined overhead rate by dividing the estimated total manufacturing overhead costs by the estimated total amount of cost driver or activity base. Common activity bases used in the calculation include direct labor costs, direct labor hours, or machine hours. The predetermined overhead rate is the estimated cost of manufacturing a product. 1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method Until now, you have learned to apply overhead to production based on...