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Practical capacity may:
Predetermined Overhead Rate
An estimated rate used to assign overhead costs to products or job orders, based on a pre-established formula or basis.
Fixed Manufacturing Overhead
Regular, static expenses associated with operating a manufacturing facility, such as rent, utilities, and salaries, that do not vary with the level of production.
Direct Labor-hours
Direct labor-hours are the total hours worked by employees directly involved in the manufacturing process, used as a measure for allocating labor costs to products.
Predetermined Overhead Rate
The rate estimated at the beginning of a period to allocate overhead to products or job orders, calculated based on expected overhead costs and an allocation base.
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