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- This topic has 3 replies, 2 voices, and was last updated 6 years ago by John Moffat.
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- September 12, 2017 at 3:10 pm #407343
What is the difference between Pre-determined and Blanket Overhead Absorption Rate ?
September 13, 2017 at 6:37 am #407379A pre-determined overhead rate is one that is calculated using the budgeted figures for production and for overheads (as is normally the case).
A blanket absorption rate is one calculated for the whole factory rather than calculating one for each department separately (which is better).
September 13, 2017 at 9:05 am #407397So Predetermined OH Rate could be Blanket when the whole factory is considered, right ?
î am asking because someone insisted Predetermined uses only units as the allocation base (which baffled me) unlike Blanket.
September 13, 2017 at 10:57 am #407428Absorption rates can be calculated on any basis (usually it is on either units or on hours).
Whichever basis is used, pre-determined rates are calculated using budget figures.This applies whether we are calculating an overall blanket rate or calculating a rate for each department.
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