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Perhaps the most important principle of input design is:
Predetermined Overhead Rate
A rate calculated before a period begins, based on estimated overhead costs and activity levels, for assigning manufacturing overhead to products.
Variable Component
A portion of costs that varies directly with the level of production or operation activity.
Predetermined Overhead Rate
An estimated rate used to assign overhead costs to products or services, based on a planned amount of cost and activity level.
Fixed Manufacturing Overhead
Costs that do not vary with the level of production output, such as rent and salaries of managerial staff.
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