OVERHEAD COSTING FORMULAS

Predetermined absorption rate

estimated or budgeted overhead for the period

estimated or budgeted units of base for the period

Direct material cost % rate

budgeted overhead x 100

budgeted direct material costs

Direct labor cost % rate

budgeted overhead x 100

budgeted direct labor cost

Prime cost % rate

budgeted overhead X 100

prime cost

Direct labor hour rate

budgeted overhead

budgeted direct labor hours

Machine hour rate

budgeted overhead

budgeted machine hours

Cost unit rate

budgeted overhead

budgeted output