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Activity Rate
The activity rate refers to a predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.
Predetermined Overhead Rate
A rate calculated before the accounting period begins, used to assign overhead costs to products or job orders based on a relevant activity base such as machine hours or labor hours.
Direct Labor-Hours
The sum of all hours spent by workers who are directly engaged in manufacturing, used as a foundation for distributing labor expenses to products or services.
Traditional Costing
An accounting method that allocates manufacturing overhead costs to products based on volume-related measures, such as labor hours or machine hours.
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