A departmental overhead rate is determined by dividing the estimated overhead associated with the department by the estimated utilization of the productive capacity of that department.

Question

Quizplus · Accepted Answer

A departmental overhead rate is calculated exactly this way, by dividing the total estimated overhead costs for a department by the estimated total units of the base activity (e.g., labor hours, machine hours) that represents the department's productive capacity. This method helps in allocating overhead costs more accurately to products or services based on their use of departmental resources.

A Departmental Overhead Rate Is Determined by Dividing the Estimated