How to calculate plantwide overhead rate?
Understand the Problem
The question is asking how to calculate the plantwide overhead rate, which typically involves identifying the total manufacturing overhead costs and dividing it by an allocation base such as total machine hours or total labor hours. This is a fundamental aspect of cost accounting.
Answer
Total estimated overhead costs divided by total estimated direct cost or cost driver.
The final answer is the plantwide overhead rate calculated by dividing total estimated overhead costs by total estimated direct cost or cost driver.
Answer for screen readers
The final answer is the plantwide overhead rate calculated by dividing total estimated overhead costs by total estimated direct cost or cost driver.
More Information
The plantwide overhead rate simplifies the process of allocating manufacturing overhead by using a single rate, making it easier to apply across multiple products.
Tips
A common mistake is not accurately estimating the total direct costs or overhead costs, which can lead to incorrect overhead allocation.
Sources
- Plantwide Overhead Rate Method - wallstreetmojo.com
- Plantwide Overhead Rate and Its Role in Product Costing - accountinginsights.org
- Plantwide overhead rate definition - accountingtools.com
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