1) Regardless of how carefully the predetermined overhead rate is estimated, Factory Overhead will usually have a balance at the end of the fiscal year.

2) The overhead rate can be expressed as a percent - age or an hourly rate.

3) The Direct Operating Overhead Rate will be applied to the Direct Labor and Benefits costs.

4) Calculate the predetermined overhead rate based on direct labour hours.

5) The standard overhead rate is determined by dividing the standard factory overhead costs by the standard amount of productive capacity.

6) The overhead rate is of utmost importance for the right and reasonable calculation of production cost.

7) The Material Overhead Rate will be applied to the cost of materials, equipment and subcontracts.

8) A flexible budget may be used to establish a standard factory overhead rate.

9) Remember that when the standard costs are used,(http:///overhead rate.html) fac tory overhead is applied to production on the basis of a predetermined standard cost overhead rate.

10) For example, if a large balance is caused by changes in manufacturing methods or in production goals, the factory overhead rate should BE revised.

11) If the balance increases in only one direction and the balance becomes large, the balance and the overhead rate should be investigated.