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Computing a Budgeted Overhead Application Rate

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Suppose a company uses machine hours as a cost-allocation base for factory overhead. How does the company compute a budgeted overhead application rate? How does it compute the amounts of factory overhead applied to a particular job?

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This solution discusses how a company can compute a budgeted overhead application rate.

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Suppose the company uses machine hours as a cost allocation base for factory overhead, and then the cost is to be allocated by applying overhead rate per machine hour. Budgeted overhead allocation rate is found out by dividing the budgeted (expected) ...

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