Calculate allocated cost, number of activities, or overhead cost per activity by entering any two values in this activity costing calculator.
Customize This Calculator
Build your own version. Describe what you want changed, added, or compared.
Related Calculators
- Marginal Cost Calculator
- Prorated Fee Calculator
- Crew Rate Calculator
- Hourly Rate Calculator
- All Business Calculators
Allocated Cost Formula
The allocated cost formula is:
- AC = allocated cost, in dollars
- N = number of activities
- OCPA = overhead cost per activity, in dollars
The calculator can also rearrange the formula to solve for a missing value:
- To calculate allocated cost: enter the number of activities and the overhead cost per activity. The calculator multiplies them.
- To calculate number of activities: enter allocated cost and overhead cost per activity. The calculator divides allocated cost by overhead cost per activity.
- To calculate overhead cost per activity: enter allocated cost and number of activities. The calculator divides allocated cost by the number of activities.
Common Activity Cost Inputs
Allocated cost depends on how you define an activity. The activity should match the way overhead is being assigned.
| Activity basis | Example use | What the number of activities means |
|---|---|---|
| Machine hours | Manufacturing overhead | Total machine hours used |
| Labor hours | Service or production labor allocation | Total labor hours worked |
| Purchase orders | Procurement overhead | Number of purchase orders processed |
| Setups | Batch setup costs | Number of production setups completed |
Example Allocated Cost Calculations
Example 1: Calculate allocated cost
You have 120 activities and an overhead cost of $18 per activity.
The allocated cost is $2,160.
Example 2: Calculate overhead cost per activity
You have an allocated cost of $4,500 and 300 activities.
The overhead cost per activity is $15.
FAQ
What is allocated cost?
Allocated cost is the amount of overhead assigned to a product, job, department, or activity. It is usually based on a cost driver, such as labor hours, machine hours, setups, or orders processed.
Can the number of activities be a decimal?
Yes. If the activity measure can be fractional, such as 12.5 labor hours or 3.75 machine hours, a decimal is valid. If the activity is a count, such as purchase orders, the value is usually a whole number.
Why can’t overhead cost per activity or number of activities be zero when solving backward?
When solving for number of activities or overhead cost per activity, the calculator must divide by one of those values. Division by zero is not valid, so the value used as the divisor must be greater than zero.
