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Pre-determined overhead rate is required to allocate overhead to units of products to calculate the cost price per unit because it is not practical to wait for the completion of the production and find out the actual overheads and then allocated the cost price to unit to start selling products that's why it is always pre-determined based on standard costs.
NO - Fixed Overhead Volume Variance
The cost of a 3M overhead projector can vary in price depending on the model and selling. The cheapest models go for about $200 while the more expensive models cost about $600.
calculation price for products: materials, labor, overhead, packing, tax
One disadvantage to using a predetermine overhead absorption rate is the fact that the rate may be too much for any particular product. If this happens, then the price of the product will be too much.
Pre-determined overhead rate is required to allocate overhead to units of products to calculate the cost price per unit because it is not practical to wait for the completion of the production and find out the actual overheads and then allocated the cost price to unit to start selling products that's why it is always pre-determined based on standard costs.
Profit
The cost of overhead minus the selling price is loss.
The cost of overhead minus the selling price is a loss. The selling price is typically large enough to include materials and profit.
Loss
The cost of overhead minus the selling price is supposed to be profit. Unfortunately, there are other charges that might eat away at this profit, like advertising, shipping, and display.
Material + Labor + overhead + desired profit
By the market mechanism...where they will be used most efficiently by those who can pay the price at equilibrium
Incorporating departmental overhead costs in your prices helps you cover the costs of production. Unfortunately, it may make your price more than your competitors.
it is more acceseble and low in price compaire to other projectors
The right price in materials management means the best value for materials that a company intends to buy. This means that the purchase of the materials will fit the allocated budget.
Yes, most companies include overhead in all their products. There are times when businesses have to discount their products, but the price will still cover the cost of producing the item.