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Predetermined fixed overhead recovery rate?
Accountancy
I didn't the concept of fixed overhead recovery rate.. Can any te me practically
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Best Answer
If I am planning to establish a coaching institute , then I will estimate all the expenses that I may incur in the future , Let's say Rent of Rs50,000 per month and also I estimated that around 100 students may attend my classes. So for 9 months - Total Cost - Rs4,50,000 (50,000*9) Total Units - 100 students Predetermined fixed overhead recovery rate - Total cost / Total units i.e, Rs4,50,000/100 = Rs4,500 per student So , here Rs4,500 is the pre-determined fixed overhead recovery rate. Here I am estimating the total cost that I may incur in the future , without actually incurring the cost , So I am predetermining the cost of each unit before actually incurring them and recovering the same from the cost of units. Hope it's clear
Avasarala Vivek Aditya
If I am planning to establish a coaching institute , then I will estimate all the expenses that I may incur in the future , Let's say Rent of Rs50,000 per month and also I estimated that around 100 students may attend my classes. So for 9 months - Total Cost - Rs4,50,000 (50,000*9) Total Units - 100 students Predetermined fixed overhead recovery rate - Total cost / Total units i.e, Rs4,50,000/100 = Rs4,500 per student So , here Rs4,500 is the pre-determined fixed overhead recovery rate. Here I am estimating the total cost that I may incur in the future , without actually incurring the cost , So I am predetermining the cost of each unit before actually incurring them and recovering the same from the cost of units. Hope it's clear
Perfectly clear In simple :: estimating fixed over before it's actually inccured and recovering the same
Thread Starter
Madhu ReddyPerfectly clear In simple :: estimating fixed over before it's actually inccured and recovering the same
Estimating fixed overhead before it's actually inccured