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.
Increase in overhead rate would have negative financial impact since its one of the cost under the income statement. Increased in overhead rate would lead to increase in costs, which eventually would lead to lower income. Sales - Direct material - Direct labor - Overhead = Profit
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
false, direct labor and manufacturing overhead = conversion cost
work in process
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.
The three basic elements of costs are direct materials, direct labor, and overhead. Direct materials refer to the supplies used in production, direct labor refers to the cost of labor directly involved in production, and overhead encompasses all other production costs not directly tied to materials or labor.
Variable manufacturing overhead cost per direct labor hour means the variable overhead cost spent for one single labor hour and formula is as follows:Variable overhead cost per labor hour = total variable overhead cost / Total direct labor hours
Direct labor are not part of overhead costs and shown separately while indirect labor are part of overhead costs and included in overhead cost because those labor cannot be allocated separately or identifiable separately.
Using direct labor hours: Overhead rate = Total Overhead Expenses /Direct labor hours Using Machine hours: Overhead rate = Total Overhead Expenses /Machine hours
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Direct labor is not part of factory overhead while indirect labor is part of overhead as these labor expenses could not be calculated directly like factory supervisor salary or line manager salary etc.
Direct Material Direct Labor direct Factory Overhead
Increase in overhead rate would have negative financial impact since its one of the cost under the income statement. Increased in overhead rate would lead to increase in costs, which eventually would lead to lower income. Sales - Direct material - Direct labor - Overhead = Profit
Material + Labor + overhead + desired profit
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
false, direct labor and manufacturing overhead = conversion cost