ECONOMICS

Detailed explanation-1: -To allocate the overhead costs, you first need to calculate the overhead allocation rate. This is done by dividing total overhead by the number of direct labor hours.

Detailed explanation-2: -Every business calculates overhead costs differently. Most of the time, software companies calculate overhead costs by taking the total number of billable hours in all projects in a given period and divide their total overhead costs by that number. This is how they get the overhead rate per hour.

Detailed explanation-3: -In order to apportion the cost of electricity to one specific department, you simply multiply the amount of the overhead by the number of employees in that department, then divide that by your total number of employees.

Detailed explanation-4: -The allocation rate is the amount of overhead cost per hour of labor that goes into the production of a unit. The calculation is as follows: Total Overhead x Total Labor Hours = Overhead Allocation Rate.