predetermined overhead rate Definition | Business Dictionaries from AllBusiness.com

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Business Definition for: predetermined overhead rate

predetermined overhead rate

rate, based on budgeted factory overhead cost and budgeted activity, that is established before a period begins.

Predetermined Overhead Rate =

Budgeted Yearly Total Factory Overhead Costs
Budgeted Yearly Activity (direct labor-hours, etc.)

Budgeted activity units used in the denominator of the formula, more often called the denominator level, are measured in direct labor-hours, machine-hours, direct labor costs, or production units.

applied cost
denominator level
multiple overhead rates
overapplied overhead
overhead application
overhead rate
plantwide overhead rate
underapplied overhead

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