Enter the total budgeted manufacturing overhead for the period.
Enter total units of the base (e.g., Direct Labor Hours, Machine Hours, or Direct Labor Dollars).
Single Plantwide Overhead Rate:
This means for every unit of your allocation base (e.g., every machine hour), you apply in overhead costs.
Test Allocation on a Job:
Enter the hours or units used by a specific job to see its allocated cost.
Allocated Overhead for this Job:
Understanding How the Single Plantwide Factory Overhead Rate is Calculated
In managerial accounting, allocating indirect costs to specific products is crucial for accurate pricing and profitability analysis. The single plantwide factory overhead rate is calculated as a method where a company uses just one rate to allocate all manufacturing overhead costs to its products or jobs. This approach assumes that overhead costs are consumed uniformly by all products, regardless of their complexity or volume.
The Calculation Formula
To determine this rate, accountants divide the total estimated overhead costs for the upcoming period by the total estimated allocation base. The formula is represented as:
Plantwide Rate = Total Estimated Overhead Costs ÷ Total Estimated Allocation Base
Total Estimated Overhead Costs: The sum of all indirect manufacturing costs such as factory rent, utilities, depreciation on equipment, and indirect labor.
Total Estimated Allocation Base: The driver used to assign costs. Common bases include Direct Labor Hours (DLH), Machine Hours (MH), or Direct Labor Cost ($).
Example Calculation
Imagine a furniture factory estimates its total overhead for the year will be $500,000. The factory is labor-intensive and expects to use 25,000 Direct Labor Hours (DLH) during the year.
The calculation would be:
$500,000 ÷ 25,000 DLH = $20.00 per Direct Labor Hour.
If a specific dining table requires 10 labor hours to build, the allocated overhead for that table would be $20.00 × 10 = $200.00.
When to Use This Method
The single plantwide rate is most effective for:
Small Manufacturers: Where operations are simple and overhead is a small portion of total costs.
Homogeneous Products: When a company produces similar products that consume resources in similar ways.
However, if a company manufactures diverse products where some are machine-heavy and others are labor-heavy, this method may lead to cost distortion. In such cases, Departmental Overhead Rates or Activity-Based Costing (ABC) might provide more accurate data.
var calculatedRateGlobal = 0;
function calculatePlantwideRate() {
// Get input values
var overhead = parseFloat(document.getElementById('totalOverheadCost').value);
var base = parseFloat(document.getElementById('allocationBase').value);
var resultContainer = document.getElementById('resultContainer');
var rateDisplay = document.getElementById('rateResult');
var textRateDisplay = document.getElementById('textRate');
// Validation
if (isNaN(overhead) || isNaN(base) || base === 0) {
alert("Please enter valid positive numbers. The Allocation Base cannot be zero.");
resultContainer.style.display = "none";
return;
}
// Calculation
var rate = overhead / base;
calculatedRateGlobal = rate;
// Formatting currency
var formattedRate = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(rate);
// Display results
rateDisplay.innerHTML = formattedRate + " / unit of base";
textRateDisplay.innerHTML = formattedRate;
resultContainer.style.display = "block";
// Reset job calculator if visible
document.getElementById('jobBase').value = ";
document.getElementById('jobResult').style.display = 'none';
}
function calculateJobAllocation() {
var jobBaseInput = parseFloat(document.getElementById('jobBase').value);
var jobResultDiv = document.getElementById('jobResult');
var allocatedCostSpan = document.getElementById('allocatedCost');
if (isNaN(jobBaseInput) || calculatedRateGlobal === 0) {
jobResultDiv.style.display = 'none';
return;
}
var totalAllocated = jobBaseInput * calculatedRateGlobal;
var formattedAllocated = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(totalAllocated);
allocatedCostSpan.innerHTML = formattedAllocated;
jobResultDiv.style.display = 'block';
}