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The plantwide overhead rate is total plantwide allocation base divided by total budgeted plantwide overhead cost.
Plantwide Overhead Rate
A single overhead absorption rate used throughout a manufacturing plant for allocating indirect costs to products.
Allocation Base
A factor used to distribute costs among different departments, products, or activities in a systematic and rational manner.
Budgeted Plantwide Overhead
An estimate of the total overhead costs to be allocated across the whole plant or company, used for budgeting and costing purposes.
- Discern the differences among assorted techniques of overhead distribution (departmental, plantwide, ABC).
- Grasp the role of allocation bases in overhead cost distribution.
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Learning Objectives
- Discern the differences among assorted techniques of overhead distribution (departmental, plantwide, ABC).
- Grasp the role of allocation bases in overhead cost distribution.
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