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Does the predetermined overhead rate change in proportion to the change in predicted production Overhead rate 100000 at .10 a unit. Outputs One group- 20000 units one at 300000 one at 400000?
Wiki User
∙ 16y ago
Predetermined overhead rate is calculated according to the normal production capacity of the plant.
Wiki User
∙ 16y ago
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How do you calculate predetermined overhead?
You take estimated overhead divided by the estimated level of production activity. It is used to assign overhead to production.
Definition of a predetermined overhead rate?
Predetermined overhead rate is that overhead rate calculated before start of production to allocate overhead costs to units of products by using some ratio in relation to some other cost like material cost or labor cost or labor hours etc.
When is the Predetermined overhead rate usually calculated?
The predetermined overhead rate used to apply overhead to finished jobs is determined before the period begins.
Why you charge production at pre determined factory overhead rate?
The predetermined factory overhead rate is the cost associated with all products produced by the company. This helps the company easily assign cost.
How do you compute predetermined overhead rate as a percentage of direct labor costs and direct labor hours?
Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.
What is the advantage of using a predetermined overhead application rate?
RUNOVER
What journal entries are used for predetermined overhead?
It is used for operating the deals .
What are the advantages of using predetermined overhead rates?
The benefits of using predetermined overhead rates is that budgeting and allocation of cash flows become easier. It also helps the firm to conserve resources to stay within a budget.
Why do companies use a predetermined overhead rate rather than actual overhead costs to apply overhead to jobs?
because they have no life, also they predetmined pigs
What is the difference between production overhead and non-production overhead?
Production overhead are overhead items necessary to produce your product or service, such as the square footage necessary to house your production equipment and area. Non-production overhead will include items not directly related to production, such as advertising & garbage collection, for example.
How do I compute predetermined overhead rate as a percentage of direct labor costs?
Predetermined overhead rate = Est. total Manuf. Overhead Cost / Est. total amt of allocation base In this case, allocation base would be direct labor (as opposed to machine labor). Hope this helps
How is predetermined overhead rates useful in costing?
It allows you to forecast future costs needed to do business.
