Discuss three basis used for calculating predetermined factory overhead rates

 FOH predermined rate is calculate on five bases some of these are follows:

1. Materials costs
2. Direct labor cost
3. Direct labor hours

1. Materials costs:

                                  We can calculate predetermined FOH rate on the bases of materials cost by the following formula:

                       Predetermined FOH rate= Estimated FOH ×100

                                                                    Materials cost

2. Direct labor cost:

                                    We can calculate FOH predetermined rate on the bases of direct labor cost, the formula is:

                           Predetermined FOH rate= Estimated FOH ×100

                                                                         Direct labor cost

3. Direct labor hours:

                                        If we calculate FOH rate predetermined on the bases of direct labor hours. The formula is:

                          Predetermined FOH rate= Estimated FOH ×100

                                                                         Direct labor hours