Predetermined Overhead Rate Definition A company uses a predetermined overhead rate to allocate overhead costs to the costs of products. Indirect costs are estimated, a cost driver is selected, cost driver activity is estimated, and then indirect costs are applied to production output based on a formula using these data. Predetermined Overhead Rate Example For
Tag: indirect costs
See Also: Financial Accounting Standards Board Financial Instruments Hedging Risk Financial Ratios Finance Beta Definition Financial Distress Costs In finance, consider a company to be in financial distress when it is having difficulty making payments to creditors. Financial distress may lead to bankruptcy. The more debt a company uses to finance its operations the more
See Also: Direct Cost vs Indirect Cost Direct Labor Cost Driver Direct Labor Variance Formulas Direct Material Variance Formulas Absorption Cost Accounting Direct Materials Definition In accounting, direct materials are the resources used to make a product. You must clearly link these resources to the product you are producing. Direct material costs are one of
See Also: Cost Center Value Drivers: Building Reliable Systems to Sustain Growth Direct Labor Variance Formulas Direct Material Variance Formulas Step Method Allocation In accounting, the cost driver definition is a factor that incurs cost. Use cost drivers to allocate variable and indirect costs to production activities or output. Include both indirect costs and direct
See Also: Activity Based Costing Standard Costing System Cost Driver Value Chain Implementing Activity Based Costing Absorption vs Variable Costing Activity Based Management Process Costing Overhead Job Costing Activity Based Costing Costing vs Traditional Costing In the field of accounting, activity-based costing and traditional costing are two different methods for allocating indirect (overhead) costs to products.
See Also: Activity-based Costing (ABC) vs Traditional Costing Activity Based Costing Activity based costing is a system that attempts to accurately trace indirect costs to products by allocating indirect costs to activities and then to products based on their usage of the activities. ABC is optimal when accuracy is very important and when indirect costs