How it works
Overhead rate = budgeted overhead / budgeted allocation base. Applied job overhead = rate × actual job base units.
Input definitions
- Budgeted overhead cost
- Enter the value in the labeled unit.
- Budgeted allocation base units
- Enter the value in the labeled unit.
- Actual job base units
- Enter the value in the labeled unit.
A worked example
- Budgeted overhead cost
- 100000
- Budgeted allocation base units
- 20000
- Actual job base units
- 100
Assumptions & limits
Uses the accounting classifications, periods and policies you enter. Illustrative management-accounting model; it is not an audited statement, filing or determination of local accounting or tax compliance.
Sources & review
Maintained by AnsRio. Methods and examples use automated checks; this does not imply independent professional certification.
Method updated 2026-10-18. Content checked against the stated method and examples. Our verification approach.
Common questions
Which allocation base should I choose?
Use a base that fits your cost policy, such as labour hours or machine hours. Keep budgeted and actual base units consistent.
How does Predetermined overhead allocation work?
Overhead rate = budgeted overhead / budgeted allocation base. Applied job overhead = rate × actual job base units.
What should I check before using Predetermined overhead allocation?
Uses the accounting classifications, periods and policies you enter. Illustrative management-accounting model; it is not an audited statement, filing or determination of local accounting or tax compliance.