.pohr-calculator-container {
font-family: 'Segoe UI', Tahoma, Geneva, Verdana, sans-serif;
max-width: 800px;
margin: 0 auto;
background: #fff;
padding: 20px;
border-radius: 8px;
box-shadow: 0 2px 10px rgba(0,0,0,0.1);
}
.pohr-calc-box {
background: #f7f9fc;
padding: 25px;
border-radius: 8px;
border: 1px solid #e1e4e8;
margin-bottom: 30px;
}
.pohr-row {
display: flex;
flex-wrap: wrap;
margin-bottom: 15px;
gap: 15px;
}
.pohr-col {
flex: 1;
min-width: 200px;
}
.pohr-label {
display: block;
margin-bottom: 5px;
font-weight: 600;
color: #2c3e50;
}
.pohr-input {
width: 100%;
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
}
.pohr-select {
width: 100%;
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
font-size: 16px;
background-color: white;
}
.pohr-btn {
background-color: #2c3e50;
color: white;
border: none;
padding: 12px 24px;
font-size: 16px;
border-radius: 4px;
cursor: pointer;
width: 100%;
transition: background 0.3s;
margin-top: 10px;
}
.pohr-btn:hover {
background-color: #34495e;
}
.pohr-result-box {
margin-top: 20px;
padding: 20px;
background-color: #e8f4f8;
border-radius: 4px;
border-left: 5px solid #3498db;
display: none;
}
.pohr-result-title {
font-weight: bold;
color: #2c3e50;
margin-bottom: 10px;
font-size: 1.1em;
}
.pohr-result-value {
font-size: 2em;
color: #2980b9;
font-weight: bold;
}
.pohr-result-explanation {
margin-top: 10px;
font-size: 0.95em;
color: #555;
}
.pohr-article h2 {
color: #2c3e50;
border-bottom: 2px solid #eee;
padding-bottom: 10px;
margin-top: 30px;
}
.pohr-article p {
line-height: 1.6;
color: #444;
margin-bottom: 15px;
}
.pohr-article ul {
margin-bottom: 20px;
padding-left: 20px;
}
.pohr-article li {
margin-bottom: 8px;
color: #444;
}
.formula-box {
background: #fdfdfd;
border: 1px dashed #ccc;
padding: 15px;
text-align: center;
font-family: 'Courier New', Courier, monospace;
margin: 20px 0;
font-weight: bold;
}
.secondary-calc {
margin-top: 20px;
padding-top: 20px;
border-top: 1px solid #ddd;
}
function updateBaseLabel() {
var type = document.getElementById('baseType').value;
var label = document.getElementById('baseInputLabel');
var actualLabel = document.getElementById('actualActivityLabel');
if (type === 'dl_hours') {
label.innerText = 'Est. Total Direct Labor Hours';
if(actualLabel) actualLabel.innerText = 'Actual Direct Labor Hours for Job';
} else if (type === 'machine_hours') {
label.innerText = 'Est. Total Machine Hours';
if(actualLabel) actualLabel.innerText = 'Actual Machine Hours for Job';
} else if (type === 'dl_cost') {
label.innerText = 'Est. Total Direct Labor Cost ($)';
if(actualLabel) actualLabel.innerText = 'Actual Direct Labor Cost for Job ($)';
} else if (type === 'units') {
label.innerText = 'Est. Total Units Produced';
if(actualLabel) actualLabel.innerText = 'Actual Units for Job';
}
}
var globalRate = 0;
var globalIsPercent = false;
function calculatePOHR() {
var cost = parseFloat(document.getElementById('estOverheadCost').value);
var base = parseFloat(document.getElementById('estBaseAmount').value);
var type = document.getElementById('baseType').value;
var resultDiv = document.getElementById('resultContainer');
var resultValue = document.getElementById('pohrResultValue');
var resultText = document.getElementById('pohrResultText');
var appliedSection = document.getElementById('appliedSection');
// Validation
if (isNaN(cost) || isNaN(base) || base === 0) {
resultDiv.style.display = 'block';
resultDiv.style.borderLeft = '5px solid #e74c3c';
resultValue.style.color = '#e74c3c';
resultValue.innerHTML = "Invalid Input";
resultText.innerHTML = "Please enter valid numbers. The allocation base cannot be zero.";
appliedSection.style.display = 'none';
return;
}
// Calculation
var rate = cost / base;
var formattedRate = "";
var explanation = "";
globalIsPercent = false;
if (type === 'dl_cost') {
// If base is dollars, rate is typically a percentage
rate = rate * 100;
globalIsPercent = true;
formattedRate = rate.toFixed(2) + "%";
explanation = "For every $1.00 of Direct Labor Cost incurred, $" + (rate/100).toFixed(2) + " of overhead is applied.";
} else {
formattedRate = "$" + rate.toFixed(2);
var unitText = "";
if (type === 'dl_hours') unitText = "per Direct Labor Hour";
else if (type === 'machine_hours') unitText = "per Machine Hour";
else unitText = "per Unit";
explanation = "For every unit of the allocation base, " + formattedRate + " of overhead costs are applied to the job.";
formattedRate = formattedRate + " " + unitText;
}
globalRate = globalIsPercent ? (rate / 100) : rate; // Store raw rate for secondary calc
resultDiv.style.display = 'block';
resultDiv.style.borderLeft = '5px solid #3498db';
resultValue.style.color = '#2980b9';
resultValue.innerHTML = formattedRate;
resultText.innerHTML = explanation;
// Show secondary calculator
appliedSection.style.display = 'block';
document.getElementById('appliedResult').innerHTML = "";
}
function calculateApplied() {
var actual = parseFloat(document.getElementById('actualActivity').value);
var output = document.getElementById('appliedResult');
if (isNaN(actual)) {
output.innerHTML = "Please enter a valid actual activity amount.";
output.style.color = "#e74c3c";
return;
}
var appliedOverhead = actual * globalRate;
output.innerHTML = "Applied Overhead: $" + appliedOverhead.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
output.style.color = "#27ae60";
}
Understanding How the Predetermined Overhead Rate is Calculated
In managerial accounting and cost accounting, accurately assigning indirect costs to products is crucial for pricing, profitability analysis, and inventory valuation. Unlike direct materials and direct labor, manufacturing overhead costs (like factory rent, electricity, and supervisor salaries) cannot be traced directly to a specific unit of production. This is where the Predetermined Overhead Rate (POHR) becomes essential.
The Predetermined Overhead Rate Formula
The predetermined overhead rate is calculated at the beginning of an accounting period (usually a year) to apply overhead costs to jobs throughout that period. The formula helps normalize costs, preventing fluctuations in unit costs due to seasonal changes in overhead spending or production volume.
Predetermined Overhead Rate =
Estimated Total Manufacturing Overhead Cost / Estimated Total Amount of the Allocation Base
Components of the Calculation
- Estimated Total Manufacturing Overhead Cost: This represents the sum of all budgeted indirect manufacturing costs for the upcoming period. It includes items such as indirect materials, indirect labor, factory utilities, factory depreciation, and property taxes on manufacturing facilities.
- Allocation Base: This is the driver used to assign the overhead. It should be the factor that most closely correlates with the incurrence of overhead costs. Common bases include:
- Direct Labor Hours: Often used in labor-intensive industries.
- Machine Hours: Preferred in highly automated manufacturing environments.
- Direct Labor Cost: Used when overhead correlates with the wage rates paid to workers.
Step-by-Step Calculation Example
Let's look at a realistic scenario for a furniture manufacturing company, "TableCraft Inc."
Step 1: Estimate Costs and Activity
At the start of the year, TableCraft estimates their total manufacturing overhead (rent, glue, sandpaper, factory utilities) will be $450,000. They decide to use Direct Labor Hours as their allocation base because their work is very manual. They estimate they will use 25,000 direct labor hours during the year.
Step 2: Apply the Formula
$$ \text{POHR} = \frac{\$450,000}{25,000 \text{ Hours}} = \$18.00 \text{ per Direct Labor Hour} $$
Step 3: Apply Overhead to a Job
If TableCraft works on "Job #101" (a custom dining table) and it takes workers 15 hours to complete, the overhead applied to that table would be:
$18.00 per hour × 15 hours = $270.00 in applied overhead cost.
Why Calculate a Predetermined Rate?
You might wonder why companies don't just use the actual overhead rate at the end of the month. There are several key reasons:
- Timeliness: Managers need to know the cost of a job immediately upon completion to quote prices to customers or bid on new contracts. Waiting for actual utility bills at the end of the month is too slow.
- Seasonality: Actual overhead costs can fluctuate (e.g., heating costs in winter) and production volume changes seasonally. Using a predetermined rate smoothes these fluctuations, so a unit produced in January costs the same on paper as a unit produced in July.
Interpreting the Result
When using this calculator, if your allocation base is a dollar amount (like Direct Labor Cost), the result will be a percentage. For example, a rate of 150% of Direct Labor Cost means that for every $1.00 you pay a worker, you must add $1.50 in overhead costs to the product's total cost.
If your base is in units (hours, machine cycles), the result is a dollar value per unit.