Discuss the Three Planning Timeframes, How They Relate to Capacity

question 18

Essay

Discuss the three planning timeframes, how they relate to capacity planning and materials planning, and the various tools associated with them.

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Definitions:

Manufacturing Overhead Applied

The portion of estimated manufacturing overhead costs that is assigned to each unit of production, based on a predetermined rate.

Job-order Costing

An accounting method that tracks costs individually for each job, rather than within set periods.

Predetermined Overhead Rate

A rate calculated before the accounting period begins, used to allocate manufacturing overhead to individual units of production based on estimated costs.

Machine Hours

The total hours that a machine or group of machines operates during a specific period, often used as a basis for allocating manufacturing overhead.