Calculate predetermined overhead rates from manufacturing overhead and allocation units, plus applied overhead, variance, department rates, and ABC rates.
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Predetermined Overhead Rate Formula
The following equation is used to calculate the predetermined overhead rate.
POR = MOC / UA
- Where POR is the predetermined overhead rate
- MOC is the manufacturing overhead cost
- UA is the unit of allocation.
To calculate a predetermined overhead rate, divide the manufacturing overhead cost by the units of allocation.
Predetermined Overhead Rate Definition
A predetermined overhead rate is defined as the ratio of manufacturing overhead costs to the total units of allocation.
Predetermined Overhead Rate Example
How to calculate predetermined overhead rate?
- First, determine the manufacturing overhead cost.
Calculate the total manufacturing overhead cost.
- Next, determine the units of allocation.
Calculate the total units of allocation.
- Finally, calculate the POR.
Calculate the predetermined overhead rate using the equation above.
