when is the predetermined manufacturing overhead rate computed
Pre-determined overhead rate A pre-determined overhead rate is the rate used to apply manufacturing overhead to work-in-process inventory. The pre-determined overhead rate is calculated before the period begins. The first step is to estimate the amount of the activity base that will be required to support operations in the upcoming period. The second step is to estimate the total manufacturing cost at that level of activity. The third step is to compute the predetermined overhead rate by dividing the estimated total manufacturing overhead costs by the estimated total amount of cost driver or activity base. Common activity bases used in the calculation include direct labor costs, direct labor hours, or machine hours.
Factors of production In economics, factors of production, resources, or inputs are what is used in the production process to produce outputâ€”that is, finished goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relationship is called the production function. There are three basic resources or factors of production: land, labour and capital. The factors are also frequently labelled "producer goods or services" to distinguish them from the goods or services purchased by consumers, which are frequently labeled "consumer goods". All three of these are required in combination at a time to produce a commodity.