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Predetermined Overhead Rate
An estimated rate used to allocate manufacturing overhead costs to individual products based on a certain activity base, such as labor hours or machine hours.
Activity-based Costing
A costing methodology that assigns overhead and indirect costs to specific activities, thereby providing more accurate product costing.
Traditional Cost System
A cost accounting system that assigns costs to products based on direct labor hours, direct materials, and manufacturing overhead, without differentiating between variable and fixed costs.
High-volume Products
Items that are produced in large quantities, typically benefiting from economies of scale in manufacturing processes.
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