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The first step in using the departmental overhead rate method requires that overhead be traced to each of the company's departments.
Departmental Overhead Rate Method
The departmental overhead rate method is a way of allocating indirect costs to products or services based on the overhead rates of specific departments within an organization, rather than using a single company-wide rate.
Overhead
The total cost of running a business that cannot be directly attributed to the production of goods or services, similar to factory overhead but can apply to non-manufacturing costs.
- Recognize and elucidate the distinctions among plantwide overhead rate, departmental overhead rate, and the techniques of activity-based costing (ABC).
- Learn the techniques for calculating departmental overhead rates and their application in cost distribution.
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Learning Objectives
- Recognize and elucidate the distinctions among plantwide overhead rate, departmental overhead rate, and the techniques of activity-based costing (ABC).
- Learn the techniques for calculating departmental overhead rates and their application in cost distribution.
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