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It's because the POHR is only an estimate. Both the cost driver and the estimated total manufacturing overhead costs in the ratio are based on past figures. You don't know what it will actually be for the year until the actual costs come in when the year is over. Obviously, the estimate won't exactly equal the actual. When it is over or under applied you must do a correcting journal entry. If overhead were over applied by 30,000 for example, you would debit Manufacturing overhead for the amount and credit COGS
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How do you determine predetermined overhead rate?
A predetermined overhead rate (POHR) is a rate used to apply manufacturing overhead (MOH) to work in progress inventory. To compute the POHR some preliminary work is needed. First, a measure of activity, called the cost driver, has to be selected as the basis for assigning MOH cost. Examples of cost driver may be machine hours, labour hours, raw material use, etc. Second, two estimations are required before calculations can be made: (1) the amount of MOH cost that will be incurred during the period and (2) the amount of cost driver that will be used during the same period. With these two estimations, a POHR is found as followed:POHR = Estimated MOH cost (1) / Estimated Amount of Cost Driver (2)With this you have the POHR! Be wary however that POHR is not the best way to apply overhead because it is a single cost driver method of applying cost. That is, the cost driver chosen may not be reflective of all situations. For example with the growing automation in production, labour hours may not be the most reflective cost drivers for items that are machine made. Secondly, the POHR is flawed when it comes to volume of production. Because the single rate is applied to all products, a low volume production that uses less cost driver than a higher volume production is applied the same amount of cost per unit as the higher volume production.A better application of overhead is the Activity Based Costing system, which you may want to look up.
How do you determine overhead rate?
A predetermined overhead rate (POHR) is a rate used to apply manufacturing overhead (MOH) to work in progress inventory. To compute the POHR some preliminary work is needed. First, a measure of activity, called the cost driver, has to be selected as the basis for assigning MOH cost. Examples of cost driver may be machine hours, labour hours, raw material use, etc. Second, two estimations are required before calculations can be made: (1) the amount of MOH cost that will be incurred during the period and (2) the amount of cost driver that will be used during the same period. With these two estimations, a POHR is found as followed:POHR = Estimated MOH cost (1) / Estimated Amount of Cost Driver (2)With this you have the POHR! Be wary however that POHR is not the best way to apply overhead because it is a single cost driver method of applying cost. That is, the cost driver chosen may not be reflective of all situations. For example with the growing automation in production, labour hours may not be the most reflective cost drivers for items that are machine made. Secondly, the POHR is flawed when it comes to volume of production. Because the single rate is applied to all products, a low volume production that uses less cost driver than a higher volume production is applied the same amount of cost per unit as the higher volume production.A better application of overhead is the Activity Based Costing system, which you may want to look up.
How do you pronounce pour?
Pour can be pronounced like pawr or pohr.
How do you spell repoire having a good relationship?
The spelling from French is rapport (rah-POHR).
What is 'land of the pigs' in Italian?
Porcareccia is an Italian equivalent of 'land of the pigs' in the sense of a 'pig farm'. It's a feminine gender noun that's pronounced 'pohr-kah-REH-chyah'. Another equivalent is porcile, which means 'pigsty'. It's a masculine gender noun that's pronounced 'pohr-CHEE-lay'.* A literal translation would be 'terra di porchi', which is pronounced 'TEH-rah Dee POHR-kee'.*The sound 'ay' is similar to the sound 'ay' in the English noun 'ray'.
How do you spell repoire as in having a good relationship?
The word (from French) is spelled rapport and pronounced similarly to (rah-POHR).
What is the French translation of the Portuguese name 'Porto-novo'?
Port-nouveau is a French equivalent of the Portuguese name Porto-novo.Specifically, the masculine nouns port in French and porto in Portuguese mean "port". The masculine adjective nouveau in French and novo in Portuguese translate as "new". The pronunciation will be "pohr noo-voh" in French and "POHR-too NOH-voo" in Portuguese.
How do you say why are you not feeling well in spanish?
Porque no te sientes bien? (POHR-keh NOH TEH SEE-ehn-tehs BIEH-n) pronounciation: sort of
What is 'Portuguese' in French?
'Portuguais' in terms of a male, or 'Portuguaise'in terms of a female, may bePortuguese equivalents of 'Portuguese'.The masculine adjective/noun 'portuguais' is the form for one or more than one Portuguese male. The feminine adjective/noun 'portuguaise' changes to 'portuguaises' when there's more than one Portuguese female.The words respectively are pronounced 'pohr-tyoo-gheh' and 'pohr-tyoo-ghehz'.
What is the Italian translation of 'to bring'?
Portare is an Italian equivalent of the English phrase "to bring."Specifically, the Italian word is a verb. It is the present form of the infinitive. The pronunciation is "pohr-TAH-reh.
What is the Italian translation of 'borne'?
Sopportato is an Italian equivalent of the English word "borne."Specifically, the Italian word is a verb. It is the masculine singular form of the past participle of the infinitve sopportare ("to bear, to tolerate"). The pronunciation is "SOHP-pohr-TAH-toh."
What are the three major types of paper based health records?
1.source-oriened record(SOHR) 2.problem-oriented record(POHR) 3.intergrated health record(IHR))
