🏭Manufacturing Cost Formulas
Predetermined Overhead Rate
Estimated Total Mfg Overhead ÷ Estimated Allocation Base = Predetermined OH Rate
What It Means
Used to apply overhead to products before knowing actual costs.
Example
Estimated Overhead:$200,000
Estimated Machine Hours:50,000 hours
$200,000 ÷ 50,000
Predetermined OH Rate = $4 per machine hour
Related Formulas
Prime Costs
Direct Materials + Direct Labor = Prime Costs
Conversion Costs
Direct Labor + Manufacturing Overhead = Conversion Costs
Total Manufacturing Costs
Direct Materials + Direct Labor + Manufacturing Overhead = Total Manufacturing Costs
Cost of Goods Manufactured (COGM)
Beginning WIP + Total Manufacturing Costs - Ending WIP = COGM
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