Overhead Rate

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Overheads at the different rates surmounted by the different jobs at times intend to be the complicated process but Different overhead rates are generally processed to the indirect costs of the quantity mentioned. These indirect cost it mentions that these costs include and cover the all the individual jobs and have respective share among the individual jobs. Indirect costs are also referred to overheads divided accordingly to the products variation. Computation of an “overhead rate” using a “base” likes direct labors hours (DLH).
Overhead rate = Total overhead rate / Hours worked by labor in a year rate
= OH / DLH
This is the rate generally used to determine the cost centers but when these formalities have done and if it has been said to estimate the plant-wide rate upon the direct labor than if the other jobs possessed longer machine hour rates and less amount of labor cost will be apportioned with less overhead cost.

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