Predetermined Overhead Rate (what it is and how to calculate it)

This video explains what a predetermined overhead rate is and illustrates how to calculate and apply the predetermined overhead rate with an example.
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[@Awuerth10]

funny i can learn everything i spend thousand for more clearly on the internet for free. Thanks a lot for the video.

[@windupperson712]

College degrees should be recognized as overrated; as they truly are

[@Janietoogood]

@@windupperson712 truth. I wish theyd just tell me what topics to go learn on youtube it’d be so much better , easier

[@anasayo1]

Tip for anyone who don't have much time: Play the video at 2x speed.

[@felicia3525]

Thank you!!! I was just thinking I can't keep my attention at his speed.

[@MeneTekelUpharsin]

Nice advice. It may seem really fast at first but then you get used to listening at that speed

[@majid7925]

1.25 is great

[@music556]

You are a LIFESAVER!! My accounting professor didn't really explain this rather important concept very well. You actually explained it in a way I can understand. Thank you!

[@Edspira]

I'm glad you found this video useful. Good luck in your course!

[@MrTRIPent]

Its like John C Reily from step brothers is tutoring me on accounting

[@TheBlackCeaserXIV]

I have found a lot of value in your videos.As a distance learning student I have really struggled with some of the concepts.But your videos have helped me feel very comfortable with management accounting and its concepts also understand and enjoy management account.It is such a relevant subject and learning to apply the concept in real life is important.Thank you for these,please keep up the good work.I would also like to find out if you have videos on advanced topics in management accounting as well?

[@yoshinegus4019]

we predetermine the rate because we want an estimate NOW!

[@jsx0328]

Ed. One thing I was curious about. Where would you get "100 labor hours"? Does the problem usually tell you how many labor hours to assign? What about if you are an accountant working for a company. Where did these labor hours specifically come from?

[@marialipy]

you loosen my tied up brain. finally I was unwrapped. thanks for the great video..

[@Edspira]

No problem! Have a great summer!!

[@TheCuteMinna]

You are just an amazing lecturer. You have explained it in simple words and examples. I am very thankful to you. I am studying for my finals, so wish me luck. Best wishes for you sir

[@rachelperry5188]

THANK YOU SO MUCH for these videos! They are so so helpful and I truly appreciate them! :)

[@zanemckinnon5115]

Thank you so much for doing these. Your explainations, demonstrations and pace are absolutely brilliant

[@robyndignan8406]

this makes a lot more sense now. Thanks so much

[@musichikk22]

Great job! I was able to correctly answer my homework question because of you!

[@Edspira]

Awesome! Great job!!

[@MyFinancialFocus]

Nice. It’s really smart to calculate costs before incurring them :)

[@xrs5avagex467]

when creating the Cost of Goods Manufactured. Do you use the amount allocated or actual amount incurred during the month in Manufacturing Overhead cost?Assuming no labour hours are given,

[@killerzcat]

Same question

[@mariabrown4664]

Awesome thank you very much for explaining so good.

[@sajjad7507]

I want to understand "DL 3,000" what does that include. Agains it was supposed that 100 labour hrs are used to build this car. I think we are adding labour cost twice!. please explain

[@loml143]

Thanks for the video. But do you think there is a way I can buy a car directly from the manufacturer?. And I need a car right now. I would love to save money.

[@nirajreddy2435]

Absolute phenomenal explanation

[@Edspira]

Thank you!

[@STZ690]

Thanks. Very helpful. 👼

[@iceesky]

my professor didnt provide visuals and i was overwhelmed by the amount of words in our lectures, thought i was just slow but your vids helped me understand managerial acctng better and faster, thank you so much!

[@Edspira]

Happy to help! Hang in there, you can learn it!

[@rossthompson1800]

Hi great video i made some great notes and uinderstand the concept. My lecturer is big on finding the total cost per unit...= DM + Dl + allocated OH... would the allocated OH in this case for hiking be the total cost excluding directs divided by the total units of tents produced. Or would i find the £25 for assebly + £100 per order + 1250 per customer?

[@rob8482]

we're not worthy...we're not worthy...(bowing as said) Thank you sir, you're saving my semester!

[@Edspira]

HA :) Thanks Robert!

[@ShadowCrashed81]

I am doing exactly this and it still says its wrong. Quite simply i don't understand

[@celsocaetano84]

I wish there was the same kind of content but approaching de service industry... usually we see all these concepts applied only to manufacturing

[@peterjohnson4472]

Great Tips i ll try to implement them. Overhead cost is an important thing that you need to take care. When i started my business it was really hard to keep records of overhead. But I managed everything with #OpusTime. It keeps records of every important thing related to business. Strongly recommended

[@sharengonsalves4451]

is the total budgeted overhead include both fixed and variable overhead costs?

[@AjaySingh-nu5jt]

Thanku so much

[@aspscatsystems7949]

Again Simple indepth and very Useful in a nutshell VIDEO Great Info! Thanks a MILLION!!!

[@amarpatil108]

Thank you very much for a wonderful presentation and easy explanation. Clarified a majority of doubts. I have a question. @8:41 - You mentioned multiplying the $40 with the actual labor hours. I am wondering that if it is still an estimate calculation how can it be actual? Just confused. Isn't the 100 Labor hours also estimated instead of being actual? Ain't we still in the beginning of the accounting period as we are yet to provide an estimate to the client?

[@virginiarobles4980]

Finally, I understand and know how to make a Predetermined Overhead Rate estimate. Thank you.

[@drmartin5062]

No one at colorado state could get this through to me. Thanks.

[@problematicss9946]

Great video!!! Explained very well, I just had a question on how to figure out if the OH is under or over applied and the journal entry that goes along with it!!

[@Indiresh199]

Thanks a lot : D

[@taxfree4603]

But that is just the cost. How will they apply the markup

[@elmeramuro]

Wish I could turn my professor onto 2x speed during class, it is so helpful.

[@christmes57]

Dollar sign actually looks pretty lit

[@sunnykang9736]

Can you explain little different situations such as spoilage existence and testing conduction?

[@thezionzion]

u own my soul now..thank u

[@Edspira]

+thezionzion And thank you, for making me smile with that funny comment! I'm glad you found the video helpful and hope you do great in your course!

[@allanmherrera]

I have a question regarding cost drivers: What if it's difficult to tell which cost is the largest cost driver? For example, in your car example you have the production of one car costing $5,000 in raw materials and $3,000 in labor. You selected labor as the cost driver but what if you selected raw materials? How would the costs have changed? Would it be negligible or could it cause problems?

[@Edspira]

You raise an excellent point, and in fact many people have criticized the use of direct labor hours (or machine hours, another commonly used cost driver) to allocate overhead. This has resulted in the creation of Activity-based Costing, which attempts to more accurately allocate costs by looking at a number of activities rather than simply using a figure such as direct labor hours.

[@allanmherrera]

Education Unlocked I understand now. Thank you!

[@Edspira]

+Allan Herrera No problem. Good luck with your class!

[@allanmherrera]

Education Unlocked Thank you very much!

[@raibelalvarado2951]

@@Edspira Hi Ed, on regards of this question. Are we ALWAYS forced to use ONLY 1 driver? I mean if we the estimation of two or more drivers, can we consider those once they have been quantified? Thanks a lot for your channel :)

[@Yinyalabim]

thanks for the vid? but is this the same as Overhead Abosorption rate?

[@TheRealLorraineAliceCalderon]

is this the same thing as single plantwide FOH and application?

[@financialanalyst1963]

You are just awesome in teaching

[@Edspira]

Thanks Taqi!

[@gabriellakeng9564]

thank you so much!!

[@Edspira]

Glad it helped!

[@slaveseth]

thank you, Hope you keep up the good work you are doing.. thanks

[@Edspira]

Thank you for the kind words!

[@dingleberries6661]

what if there are fixed and variable overhead? variable overhead is affected by the amount of the activity of the cost driver but fixed overhead isn't. how to calculate for the total MOH then?

[@ShadowRonan]

my textbook says to calculate the budgeted cost driver first because a part of budgeted MOH is variable overhead, which is based on the cost driver

[@BrianRabafi]

Thank you very much for this, It helped me greatly for my AAT Budgeting exam coming up next week.

[@na8iha]

is predetermined overhead rate the same thing as charge out rate?

[@andrejimfra]

Hi, thanks for this video. It's very clear and helpful!

[@billylonergan3911]

Thanks Michael

[@sohaibahmed226]

Whew this is the most confusing chapter with all these calculations

[@kyriosi2966]

Your littrally better than my teacher

[@saranajemeddine5589]

thanks for helping me get now I get for my homework

[@Edspira]

No problem, I'm glad you were able to do well on your homework!

[@scottrushton6650]

Are you sure the 3000 in DL is DL Hours? I think it is DL$ because you have it listed as dollars in the cost breakdown.

[@clickbaitpolice9792]

Look at 7:31. He said it's equal to 100 labour hours

[@shafirahjawaharraja4260]

Thank you!.. it's reallt helpful

[@tinadiamond5054]

Good help for assignment. Thanks.

[@tilin2096]

❤❤❤❤❤

[@Edspira]

😀

[@melismadiddle]

I think I get it... O.O Test tomorrow.... O.O

[@hhz6551]

You are the best teacher sir thanks a lot

[@Edspira]

Thanks!

[@faribar9974]

Absolute phenomenal explanation ! Thank you so much!

[@francescociccone2224]

very clever

[@ashenone9436]

Thank you. Truly.

[@titozedan4016]

thanks man شكرا

[@bulbuljain5647]

Thank u so much....

[@joe6812]

HORRIBLE

[@demonfinnbalor2012]

Thanks

[@dreammajor]

Thanks!

[@TheWaveism]

It all makes sense now :) Thank you!

[@Edspira]

No problem Scott!