Departmental Rate

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DEFINITION of 'Departmental Rate '

The overhead expense rate for every department in a factory production process. The departmental rate is different for every stage of the production process when various departments perform selected steps to complete the final process. By breaking up overhead for individual business sections rather than having a company-wide rate, management can assess corporate inefficiencies more accurately.

INVESTOPEDIA EXPLAINS 'Departmental Rate '

The departmental rate is specific to every segregated step in the entire process. For example, if a company makes bread, different departmental rates could be used for the actual production/manufacturing line and the bagging process.

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