equations

Question 1

Overhead Allocation Rates equation?

Answer 1

OAR=
Budgeted Overhead
/
Budgeted Activity Level (Allocation Base)

Activity Level measured in machine hours, labour hours, or other suitable units.
Calculated using budgeted (estimated) figures before the accounting period.

Post-Period Analysis:
Actual overheads and production known at period end.
Enables calculation of under or over absorption.