- Identify overhead costs. …
- Estimate the overhead costs for a specific time period. …
- Choose a cost driver to use in your calculations. …
- Estimate the figure for the cost driver. …
- Calculate the predetermined overhead rate.
What is an activity cost driver?
An activity cost driver, also known as a causal factor, causes the cost of an activity to increase or decrease. An example is a change in the cost of warehousing or a change in the level of production.
How do you define activity level?
Definition. The physical activity level can also be estimated based on a list of the (physical) activities a person performs from day to day. Each activity is connected to a number, the physical activity ratio. The physical activity level is then the time-weighted average of the physical activity ratios.
