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. This means for every hour needed to make a product, you need to allocate $3.33 worth of overhead to that product.

Detailed explanation-2: -The total cost of production is divided by the total amount paid in numbers, forming the average total cost formula. A straightforward and easy-to-use procedure, the total-cost formula is calculated by dividing the total production cost by the number of products manufactured.

Detailed explanation-3: -The labor cost per unit is obtained by multiplying the direct labor hourly rate by the time required to complete one unit of a product.

Detailed explanation-4: -Manufacturing Overhead Formula To get a percentage, divide by your monthly sales and multiply that number by 100. Here’s the manufacturing overhead equation: Manufacturing Overhead Costs / Number of Sales x 100 = Percentage.