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Week 2 Discussion Job Order and Process 1

Week 2 Discussion Job Order and Process 1 - the denominator...

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Predetermined overhead rate is a rate based on budgeted overhead costs and budgeted activity that is established or determined prior to a period beginning. Predetermined Overhead can be calculated as follows: Predetermined Overhead Rate = Estimated total manufacturing cost/ Estimated total amount of allocation base The source below elaborates on this equation by explaining that the denominator is often called
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Unformatted text preview: the denominator level and are measured in direct labor costs, hours, machine hours, or production units. Our textbook points out an obvious point, that the equation above is based on estimates since it is a predetermined value. Source: http://www.allbusiness.com/glossaries/predetermined-overhead-rate/4945636-1.html...
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