Factory Overhead Cost Calculator
Aggregate indirect manufacturing expenses and calculate predetermined overhead allocation rates (POHR) per direct labor hour or machine hour.
Manufacturing Overhead & Predetermined Allocation Rate
Predetermined Overhead Rate (POHR) Formula
POHR = Estimated Total Factory Overhead ÷ Total Allocation Base (Direct Labor Hours or Machine Hours)- Factory Overhead: Indirect plant expenses (rent, utilities, indirect labor, plant insurance, supervision).
- Allocation Bases: Direct labor hours (DLH), machine hours (MH), or direct labor dollars ($).
Step-by-Step Worked Example
Calculation Steps:
- Total Factory Overhead = $60k + $80k + $25k + $15k + $12k + $18k = $210,000
- POHR = $210,000 / 10,000 DLH = $21.00 / Direct Labor Hour
How to Use This Calculator
- 1Input plant indirect expenses: lease, supervisor salaries, utilities, and insurance.
- 2Select your allocation basis (Direct Labor Hours, Machine Hours, or Direct Labor Cost).
- 3Enter total allocation base quantity to determine your POHR.
Assumptions & Limitations
- Overhead excludes non-manufacturing corporate SG&A expenses.
- Allocation base is a primary driver of indirect factory costs.
Frequently Asked Questions
What is a predetermined overhead rate (POHR)?
A POHR is an accounting rate used to apply manufacturing overhead costs to work-in-process inventory and individual jobs based on an activity metric like labor or machine hours.
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