Overhead Rate Calculator

✖Overhead Costs are expenses incurred by a business that are not directly attributable to the production of goods or services.ⓘ Overhead Costs [OC]			+10% -10%
✖Revenue refers to the total amount of money generated by a business from its primary activities.ⓘ Revenue [Rev]			+10% -10%

✖Overhead Rate represents the proportion of overhead costs incurred by a business relative to its direct costs, such as labor and materials.ⓘ Overhead Rate [OR]

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Formula

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Overhead Rate

Formula

`"OR" = "OC"/"Rev"`

Example

`"5.833333"="350000"/"60000"`

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Overhead Rate Solution

STEP 0: Pre-Calculation Summary

Formula Used

Overhead Rate = Overhead Costs/Revenue
OR = OC/Rev
This formula uses 3 Variables

Variables Used

Overhead Rate - Overhead Rate represents the proportion of overhead costs incurred by a business relative to its direct costs, such as labor and materials.
Overhead Costs - Overhead Costs are expenses incurred by a business that are not directly attributable to the production of goods or services.
Revenue - Revenue refers to the total amount of money generated by a business from its primary activities.

STEP 1: Convert Input(s) to Base Unit

Overhead Costs: 350000 --> No Conversion Required
Revenue: 60000 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

OR = OC/Rev --> 350000/60000

Evaluating ... ...

OR = 5.83333333333333

STEP 3: Convert Result to Output's Unit

5.83333333333333 --> No Conversion Required

FINAL ANSWER

5.83333333333333 ≈ 5.833333 <-- Overhead Rate

(Calculation completed in 00.004 seconds)

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Created by Vishnu K

BMS College of Engineering (BMSCE), Bangalore

Vishnu K has created this Calculator and 200+ more calculators!

Verified by Keerthika Bathula

Indian Institute of Technology, Indian School of mines, Dhanbad (IIT ISM Dhanbad), Dhanbad

Keerthika Bathula has verified this Calculator and 25+ more calculators!

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Overhead Rate

Go Overhead Rate = Overhead Costs/Revenue

Overhead Rate Formula

Overhead Rate = Overhead Costs/Revenue
OR = OC/Rev

What is Overhead Rate?

The overhead rate, also known as the overhead allocation rate or overhead absorption rate, is a measure used in cost accounting to allocate indirect costs to products or services. Indirect costs are expenses that are not directly attributable to a specific product or service but are incurred in the overall operation of a business. These costs can include rent, utilities, administrative salaries, and depreciation.
The overhead ate is typically calculated by dividing the total indirect costs incurred by a business by a relevant cost driver, such as direct labor hours, machine hours, or labor cost.
Once the overhead rate is determined, it is applied to each unit of the cost driver to allocate overhead costs to the products or services produced. This allows businesses to more accurately determine the total cost.

How to Calculate Overhead Rate?

Overhead Rate calculator uses Overhead Rate = Overhead Costs/Revenue to calculate the Overhead Rate, The Overhead Rate is a financial metric used to allocate indirect costs or overhead expenses to the direct costs of production or services. Overhead Rate is denoted by OR symbol.

How to calculate Overhead Rate using this online calculator? To use this online calculator for Overhead Rate, enter Overhead Costs (OC) & Revenue (Rev) and hit the calculate button. Here is how the Overhead Rate calculation can be explained with given input values -> 5.833333 = 350000/60000.

FAQ

What is Overhead Rate?

The Overhead Rate is a financial metric used to allocate indirect costs or overhead expenses to the direct costs of production or services and is represented as OR = OC/Rev or Overhead Rate = Overhead Costs/Revenue. Overhead Costs are expenses incurred by a business that are not directly attributable to the production of goods or services & Revenue refers to the total amount of money generated by a business from its primary activities.

How to calculate Overhead Rate?

The Overhead Rate is a financial metric used to allocate indirect costs or overhead expenses to the direct costs of production or services is calculated using Overhead Rate = Overhead Costs/Revenue. To calculate Overhead Rate, you need Overhead Costs (OC) & Revenue (Rev). With our tool, you need to enter the respective value for Overhead Costs & Revenue and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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