Overhead Allocation Rate Calculator
Allocate a budgeted overhead pool to a job using labor hours, machine hours or another consistent driver.
Overhead per driver unitExample$20.00
- Overhead applied to job
- $800.00
How to calculate overhead allocation rate
Predetermined overhead rate = overhead pool ÷ budgeted activity; applied overhead = rate × job activity
Choose one allocation driver and use it for both activity inputs. This does not reconcile actual over- or under-applied overhead at period end.
Worked example
An illustrative scenario. “Reset to example” restores it in the calculator.
- Budgeted overhead pool
- $60,000
- Budgeted allocation-driver units
- 3,000 driver units
- Driver units used by this job
- 40 driver units
Overhead per driver unit: $20.00
Overhead Allocation Rate FAQ
Can I use machine hours instead of labor hours?
Yes. Both activity inputs must then be machine hours. Pick the driver that best reflects how your overhead resources are consumed.